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4.28 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 of Surplus, i.e., Balance in Statement of Profit & Loss 7,000
Less: Opening Balance of Surplus, i.e., Balance in Statement of Profit & Loss 5,500
1,500
Add: Transfer to General Reserve 5,000
6,500
Less: Gain (Profit) on Sale of Own Debentures 300
Net Profit before Tax and Extraordinary Items 6,200
Adjustment for Non-Cash and Non-Operating Items:
Add: Depreciation on Machinery 4,000
Goodwill amortised 2,000
Loss on Sale of Investments 200
Interest on Debentures 1,500 7,700
Less: Non-Operating Income:
Interest on Investments (` 3,000 × 10/100) (300)
Operating Profit before Working Capital Changes 13,600
Add: Increase in Current Liabilities:
Trade Payables 3,200
Other Current Liabilities 500 3,700
17,300
Less: Increase in Current Assets:
Inventories 1,500
Trade Receivables 11,000 12,500
Cash Flow from Operating Activities 4,800
(B) Cash Flow from Investing Activities
Purchase of Machinery (13,000)
Purchase of 10% Investments (WN 3) (8,000)
Proceeds from Sale of 10% Investments 2,800
Purchase of Own Debentures (as investment) (4,500)
Proceeds from Sale of Own Debentures 4,800
Interest on Investments 300
Cash Used in Investing Activities (17,600)
(C) Cash Flow from Financing Activities
Proceeds from Issue of Share Capital 5,000
Proceeds from Long-term Borrowings (Debentures) 10,000
Increase in Bank Overdraft 300
Interest on Debentures (1,500)
Cash Flow from Financing Activities 13,800
(D) Net Increase in Cash and Cash Equivalents (A + B + C) 1,000
(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) 13,000
Working Notes:
1. It has been assumed that new debentures have been issued at the end of current accounting year.
2. It has been assumed that new investments have been purchased at the end of the current accounting year.