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4.30 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 3,08,000
Less: Opening Balance of Surplus, i.e., Balance in Statement of Profit & Loss 1,82,000
1,26,000
Add: Interim Dividend Paid on Equity Shares during the Current Year 56,000
Preference Dividend Paid during the year 16,000
Provision for Tax 16,000
Net Profit before Tax and Extraordinary Items 2,14,000
Add: Non-Cash Expense:
Depreciation 28,000
2,42,000
Less: Gain (Profit) on Sale of Machinery 14,000
Operating Profit before Working Capital Changes 2,28,000
Add: Decrease in Current Assets and Increase in Current Liabilities:
Inventories 56,000
Trade Payables 98,000 1,54,000
3,82,000
Less: Increase in Current Assets and Decrease in Current Liabilities:
Trade Receivables 2,10,000
Other Current Liabilities 14,000 2,24,000
Cash Generated from Operations 1,58,000
Less: Tax Paid 16,000
Cash Flow from Operating Activities 1,42,000
(B) Cash Flow from Investing Activities
Proceeds from Sale of Machinery 56,000
Payment for Purchase of Machinery (WN) (1,82,000)
Cash Used in Investing Activities (1,26,000)
(C) Cash Flow from Financing Activities
Proceeds from Issue of Equity Shares 70,000
Interim Dividend Paid on Equity Shares (56,000)
Preference Dividend Paid (16,000)
Cash Used in Financing Activities (2,000)
(D) Net Increase in Cash and Cash Equivalents (A + B + C) 14,000
Add: Cash and Cash Equivalents in the beginning of the year 70,000
(E) Cash and Cash Equivalents at the end of year 84,000
Working Notes:
1. Dr. PLANT AND MACHINERY ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 2,80,000 By Bank A/c (Sale) 56,000
To Gain (Profit) on Sale of Machinery A/c 14,000 By Depreciation A/c 28,000
(Statement of Profit & Loss) By Balance c/d 3,92,000
To Bank A/c (Balancing Figure) 1,82,000
(Purchase of Machinery)
4,76,000 4,76,000

2. Preference Shareholders get a preferential right as to payment of dividend. In the given question, company declared and
paid dividend on Equity Shares. So, it is implied that dividend was first paid to the preference shareholders and then to
equity shareholders.