Page 291 - AAAXII

M.278 An Aid to Accountancy—CBSE XII

Add: Increase in Current Liabilities:
Trade Payables 60,000
1,55,000
Less: Increase in Current Assets:
Inventories (20,000)
Trade Receivables (60,000)
Cash Generated from Operations 75,000
Less: Tax paid (25,000)
Cash Flow from Operating Activities 50,000
B. Cash Flow from Investing Activities
Purchase of Machinery (3,15,000)
Proceeds from Sale of Machinery 28,000
Proceeds from Sale of Non-current Investments 25,000
Cash Used in Investing Activities (2,62,000)
C. Cash Flow from Financing Activities
Proceeds from Issue of Shares 3,25,000
Redemption of Debentures (Including premium) (27,500)
Bank Overdraft Paid (8,000)
Interest on Debentures Paid (7,500)
Cash Flow from Financing Activities 2,82,000
D. Net Increase in Cash and Cash Equivalents (A + B + C) 70,000
Add: Opening Cash and Cash Equivalents 20,000
E. Closing Cash and Cash Equivalents 90,000
Working Notes:
1. Net Profit before Tax and Extraordinary Items: `
Closing Surplus, i.e., Balance in Statement of Profit and Loss 40,000
Less: Opening Surplus, i.e., Balance in Statement of Profit and Loss 30,000
Profit during the year 10,000
Add: Provision for Tax 25,000
Transfer to General Reserve 13,000
Net Profit before Tax and Extraordinary Items 48,000
2. Dr. PLANT AND MACHINERY ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 4,10,000 By Bank A/c (Sale Proceeds) 28,000
To Gain (Profit) on Sale of Machinery A/c 13,000 By Accumulated Depreciation A/c 20,000
(` 28,000 – ` 15,000) By Balance c/d 6,90,000
To Bank A/c (Bal. Fig.) (Purchase) 3,15,000
7,38,000 7,38,000

3. Dr. ACCUMULATED DEPRECIATION ACCOUNT Cr.
Particulars ` Particulars `
To Plant and Machinery A/c 20,000 By Balance b/d 60,000
To Balance c/d 90,000 By Statement of Profit and Loss (Bal. Fig.) 50,000
1,10,000 1,10,000

4. Dr. NON-CURRENT INVESTMENTS ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 70,000 By Bank A/c (` 20,000 + 25% of ` 20,000) 25,000
To Capital Reserve A/c 5,000 By Balance c/d 50,000
75,000 75,000