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4.38 Analysis of Financial Statements—CBSE XII
Solution:

CASH FLOW STATEMENT
for the year ended 31st March, 2024
Particulars ` `
I. Cash Flow from Operating Activities
Net profit before Tax and Extraordinary Items (WN 1) 2,70,000
Add: Non Operating/Non-cash Expenses:
Depreciation on Machinery (WN 3) 2,06,000
Loss on sale of Machinery 4,000
Operating Profit before Working Capital changes 4,80,000
Less: Increase in Current Assets and Decrease in Current Liabilities:
Inventories 90,000
Trade Payables 50,000 1,40,000
Cash Generated from Operations 3,40,000
Less: Income Tax Paid 60,000 2,80,000
Cash Flow from Operating Activities 2,80,000
II. Cash Flow from Investing Activities
Purchase of Machinery (WN 2) (6,30,000)
Proceeds from Sale of Machinery 20,000
Goodwill Purchased (2,00,000) (8,10,000)
Cash Used in Investing Activities (8,10,000)
III. Cash Flow from Financing Activities
Proceeds from Issue of Shares 5,00,000
Proceeds from Long-term Borrowings 1,00,000 6,00,000
Cash Flow from Financing Activities 6,00,000
IV. Net Increase in Cash and Cash Equivalents (I + II + III) 70,000
Add: Opening Balance of Cash and Cash Equivalents 1,20,000
V. Closing Balance of Cash and Cash Equivalents 1,90,000

Working Notes:
1. Calculation of Net Profit before Tax and Extraordinary Items: `
Surplus, i.e., Balance in Statement of Profit & Loss (` 5,00,000 – ` 3,00,000) 2,00,000
Add: Provision for Tax 70,000
Net Profit before Tax and Extraordinary Items 2,70,000

2. Dr. MACHINERY ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 21,00,000 By Bank A/c (Sale) 20,000
To Bank A/c (Balancing Figure) 6,30,000 By Accumulated Depreciation A/c 6,000
(Purchase) By Loss on Sale of Machinery A/c 4,000
(Statement of Profit & Loss)
By Balance c/d 27,00,000
27,30,000 27,30,000