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4.24 Analysis of Financial Statements—CBSE XII
Solution:
CASH FLOW STATEMENT
for the year ended 31st March, 2024
Particulars `
(A) Cash Flow from Operating Activities
Closing Balance as per Surplus, i.e., Balance in Statement of Profit & Loss 7,000
Add: Opening Debit Balance (Loss) as per
Surplus, i.e., Balance in Statement of Profit & Loss 4,500
Transfer to General Reserve 5,000
Net Profit before Tax and Extraordinary Items 16,500
Add: Non-cash and Non-operating Expenses:
Depreciation 4,000
Loss on Sale of 10% Investments 200
Interest on Debentures 1,500 5,700
22,200
Less: Non-operating Income:
Interest on 10% Investments 300
Operating Profit before Working Capital Changes 21,900
Add: Increase in Current Liabilities:
Sundry Creditors 3,500
Bills Payable 500 4,000
Less: Increase in Current Assets: 25,900
Inventories 2,500
Trade Receivables 11,000 13,500
Cash Flow from Operating Activities 12,400
(B) Cash Flow from Investing Activities
Purchase of Machinery (13,000)
Purchase of Investments (WN 3) (8,000)
Proceeds from Sale of Investments 2,800
Interest on 10% Investments 300
Cash Used in Investing Activities (17,900)
(C) Cash Flow from Financing Activities
Proceeds from Issue of Equity Share Capital 5,000
Proceeds from Long-term Borrowings (10% Debentures) 10,000
Increase in Short-term Borrowings (Cash Credit) 1,000
Interest on Debentures (1,500)
Cash Flow from Financing Activities 14,500
(D) Net Increase in Cash and Cash Equivalents (A + B + C) 9,000
(E) Add: Cash and Cash Equivalents in the beginning of the year 12,000
(F) Cash and Cash Equivalents at the end of the year (D + E) 21,000

Working Notes:
1. It is assumed that new debentures have been issued at the end of the current accounting year.
2. It is assumed that new investments have been purchased at the end of the current accounting year.