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Model Test Papers M.487

23. Star Ltd.
CASH FLOW STATEMENT for the year ended 31st March, 2018

Particulars ` `
I. Cash Flow from Operating Activities
Net Profit before Tax and Extraordinary Items (WN 1) 3,00,000
Add: Non-cash and Non-operating charges:
Goodwill amortised 10,000
Depreciation on Machinery (WN 4) 1,29,000
Interest on 12% Debentures (12% of ` 5,00,000) 60,000
Less: Gain (Profit) on Sale of Machinery (4,000)
Operating Profit before Working Capital changes 4,95,000
Less: Increase in Current Assets:
Stock-in-Trade 62,000
Cash Generated from Operations 4,33,000
Less: Tax Paid 70,000
Cash Flow from Operating Activities 3,63,000
II. Cash Flow from Investing Activities
Purchase of Machinery (WN 3) (5,00,000)
Purchase of Non-current Investment (25,000)
Sale of Machinery (WN 3) 92,000
Cash Used in Investing Activities (4,33,000)
III. Cash Flow from Financing Activities
Issue of Share Capital 1,00,000
Redemption of 12% Debentures (50,000)
Interest on 12% Debentures (12% of ` 5,00,000) (60,000)
Increase in Bank Overdraft 1,00,000
Cash Flow from Financing Activities 90,000

IV. Net Increase in Cash and Cash Equivalents (I + II + III) 20,000
Add: Opening Balance of Cash and Cash Equivalents:
Current Investments 60,000
Cash and Cash Equivalents 60,000 1,20,000
1,40,000
V. Cash and Cash Equivalents at the end:
Current Investments 50,000
Cash and Cash Equivalents 90,000 1,40,000
Working Notes:
1. Calculation of Net Profit before Tax and Extraordinary Items:
`
Closing Balance of Surplus, i.e., Balance in Statement of Profit and Loss 2,00,000
Less: Opening Balance of Surplus, i.e., Balance in Statement of Profit and Loss (50,000)
2,50,000
Add: Provision for tax made during the year (WN 2) 50,000
Net Profit before Tax and Extraordinary Items 3,00,000