Page 265 - MA-12

Cash Flow Statement—Based on Accounting Standard-3 (Revised) 3.21
Solution: CASH FLOW STATEMENT
for the year ended 31st March, 2019
Particulars ` `
A. Cash Flow from Operating Activities
Net Profit before Tax (WN 1) 3,10,000
Adjustments for Non-cash and Non-Operating Items:
(i) Loss on Sale of Machine 3,000
(ii) Depreciation (WN 3) 75,000
(iii) Interest on Debentures (` 1,00,000 × 10/100) + (` 1,00,000 × 10/100 × 6/12) 15,000
(iv) Interest on Bank Loan 12,000
(v) Interest on Investment (7,000) 98,000
Operating Profit before Working Capital Changes 4,08,000
Add: Decrease in Current Assets and Increase in Current Liabilities
Trade Payables 60,000
Inventories 30,000 90,000
4,98,000
Less: Increase in Current Assets:
Trade Receivables 50,000
Cash Generated from Operations 4,48,000
Less: Tax Paid 50,000
Cash Flow from Operating Activities 3,98,000
B. Cash Flow from Investing Activities
Purchase of 10% Investments (20,000)
Interest on Investment 7,000
Sale Proceeds from Machinery 12,000
Purchase of Machinery (WN 2) (2,90,000)
Cash Used in Investing Activities (2,91,000)
C. Cash Flow from Financing Activities
Proceeds from Issue of Share Capital 1,00,000
Securities Premium Receipt 15,000
Proceeds from 10% Debentures 90,000
Interim Dividend Paid (25,000)
Interest on Debentures (15,000)
Payment of 12% Bank Loan (1,00,000)
Interest on Bank Loan (12,000)
Dividend Paid (1,50,000)
Cash Used in Financing Activities (97,000)
D. Net Increase in Cash and Bank Balances (A + B + C) 10,000
Add: Opening Balance of Cash and Bank Balances 3,50,000
E. Closing Balance of Cash and Bank Balances 3,60,000

Working Notes:
1. Calculation of Net Profit before Tax: `
Closing Surplus, i.e., Balance in Statement of Profit and Loss 2,15,000
Less: Opening Surplus, i.e., Balance in Statement of Profit and Loss 1,70,000
Net Profit 45,000
Add: Transfer to General Reserve 20,000
Dividend Paid (Proposed Dividend for 2017–18) 1,50,000
Provision for Tax (WN 4) 70,000
Interim Dividend 25,000 2,65,000
Net Profit before Tax 3,10,000