Page 106 - AAAXII

M.100 An Aid to Accountancy—CBSE XII

B. Cash Flow from Investing Activities
Purchase of Machinery (20,25,000)
Sale of Machinery 45,000
Cash Used in Investing Activities (19,80,000)
C. Cash Flow from Financing Activities
Issue of Equity Share Capital 10,00,000
Payment of Bank Overdraft (25,000)
Interest paid on Debentures (1,25,000)
Issue of Debentures 9,00,000
Cash Flow from Financing Activities 17,50,000
D. Net Increase in Cash and Cash Equivalents (A + B + C) 75,000
Add: Opening Cash and Cash Equivalents (Cash and Bank Balance) 1,50,000
E. Cash and Cash Equivalents (Cash and Bank Balances) at the end of the year 2,25,000

Working Notes:
1. Calculation of Net Profit before Tax and Extraordinary Items: `
Closing Balance of Statement of Profit and Loss 12,50,000
Less: Opening Balance of Statement of Profit and Loss 10,00,000
2,50,000
Add: Provision for Tax (WN 2) 1,25,000
Net Profit before Tax and Extraordinary Items 3,75,000
2. Dr. PROVISION FOR TAX ACCOUNT Cr.
Particulars ` Particulars `
To Bank A/c (Tax paid) 50,000 By Balance b/d 75,000
To Balance c/d 1,50,000 By Statement of Profit and Loss (Provision Made) 1,25,000
(Balancing Figure)
2,00,000 2,00,000

3. Dr. PLANT AND MACHINERY ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 25,00,000 By Bank A/c (Sale Proceeds) 45,000
To Bank A/c (Purchase)—Balancing Figure 20,25,000 By Accumulated Depreciation A/c 50,000
By Loss on Sale of Machinery A/c* 30,000
(Statement of Profit and Loss)
By Balance c/d 44,00,000
45,25,000 45,25,000

*Loss on Sale of Machinery = Book Value as on date of Sale – Sale Proceeds
= (` 1,25,000 – ` 50,000) – ` 45,000 = ` 30,000.

4. Dr. ACCUMULATED DEPRECIATION ACCOUNT Cr.
Particulars ` Particulars `
To Machinery A/c (Transfer) 50,000 By Balance b/d 2,50,000
To Balance c/d 4,00,000 By Depreciation A/c (Balancing Figure) 2,00,000
(Statement of Profit and Loss)
4,50,000 4,50,000