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Cash Flow Statement 4.21
Additional Information:
(i) Machinery costing ` 1,00,000 on which depreciation charged was ` 70,000, was sold
at a profit of 20% on book value. Depreciation charged during the year amounted to
` 70,000.
(ii) Preference Shares were redeemed at par on 31st March, 2024.
(iii) Debentures were redeemed on 1st January, 2024 and Equity Shares were issued on
1st April, 2023.
(iv) The company declared and paid interim dividend on Equity Shares @ 8%. It did not
propose final dividend on Equity Shares.
(v) Non-current Investments costing ` 60,000 were sold at a profit of 20%.
(vi) Income tax ` 45,000 was provided.
Solution: CASH FLOW STATEMENT
for the year ended 31st March, 2024
Particulars ` `
A. Cash Flow from Operating Activities
Net Profit before Tax (WN 1) 42,000
Adjustment for Non-cash and Non-operating Items:
Add: Depreciation on Machinery (WN 3) 70,000
Less: Gain (Profit) on Sale of Machinery (WN 3) (6,000)
Add: Interest on Debentures 21,375
[(9% × ` 2,50,000 × 9/12) + (9% × ` 2,00,000 × 3/12)]
Less: Gain (Profit) on Sale of Non-current Investments (WN 4) (12,000)
Operating Profit before Working Capital Changes 1,15,375
Add: Decrease in Current Assets:
Inventories 50,000
Less: Increase in Current Assets:
Trade Receivables (30,000)
Net Cash Inflow from Operating Activities 1,35,375
Less: Tax Paid (WN 2) 20,000 1,15,375
Cash Flow from Operating Activities 1,15,375
B. Cash Flow from Investing Activities
Purchase of Machinery (WN 3) (3,00,000)
Purchase of Non-current Investment (WN 4) (1,20,000)
Sale of Machinery (WN 3) 36,000
Sale of Non-current Investments (WN 4) 72,000 (3,12,000)
Cash Used in Investing Activities (3,12,000)
C. Cash Flow from Financing Activities
Cash Proceeds from Issue of Equity Shares (` 6,00,000 – ` 3,00,000) 3,00,000
Redemption of 12% Preference Shares (1,00,000)
Redemption of 9% Debentures (50,000)
Payment of Preference Dividend (12% of ` 2,00,000) (24,000)
Payment of Equity Dividend (8% of ` 6,00,000) (48,000)
Payment of Interest on Debentures (21,375) 56,625
Cash Flow from Financing Activities 56,625
D. Net Decrease in Cash and Cash Equivalents (A + B + C) (1,40,000)
Add: Opening Cash and Cash Equivalents 3,10,000
E. Closing Cash and Cash Equivalents 1,70,000