Cash Flow Statement Problem

Question: Following are the summarized balance sheets of Growell Ltd., as on 31st March, 1998 and 1999. 1998 1999 1998 Share Capital 200,000 250,000 Land & Building 200,000 General reserve 50,000 60,000 Machinery 150,000 P L A/c 30,500 30,600 Stock 100,000 Bank Loan 70,000 Debtors 80,000 Creditors 150,000 135,200 Cash 500 Provision for Taxation 30,000 35,000 Bank Goodwill 530,500 510,800 530,500

1999 190,000 169,000 74,000 64,200 800 7,800 5,000 510,800

Additional Information: During the year ended 31st March, 2004 (i) Dividend of Rs. 23,000 was paid. (ii) Assets of another company were purchased for a consideration of Rs. 50,000 payable in shares. The following assets were purchased: Stock: Rs. 20,000; Machinery Rs. 25,000 (iii) Machinery was further purchased for Rs. 8,000 (iv) Depreciation written off on machinery Rs. 12,000; and (v) Income-tax provided during the year Rs. 33,000; (vi) loss on sale of machinery Rs. 200 was written off to general reserve. You are required to prepare the Statement of Cash flow. Solution: Share Capital Account By Balance b/d By Machinery By Stock 250,000 By Goodwill 250,000

200,000 25,000 20,000 5,000 250,000

To Machinery To Balance c/d

General Reserve Account 200 By Balance b/d 60,000 By P L A/c 60,200

50,000 10,200 60,200

To Bank A/c To Balance c/d

Provision for Taxation 28,000 By Balance b/d 35,000 By P L A/c 63,000

30,000 33,000 63,000

To Balance c/d

To Balance b/d To Share Capital To Bank

To Proposed Dividend To General res. To Depreciation To provision for Tax

Machinery 150,000 By Depreciation 25,000 By General Res. 8,000 By Bank By Balance c/d 183,000 Adjusted Profit & Loss Account 23,000 By Balance b/d 10,200 By Operationg Profit 22,000 before working capital 33,000 changes

12,000 200 1,800 169,000 183,000

30,500

88,300

To Balance c/d

30,600 118,800

Note: Depreciation on Land & Building Opening Balance Less: Closing balance

118,800

200,000 190,000 10,000

Growell Ltd. Cash Flow Statement ( As per AS 3: Indirect Method) for the year ended 31st March, 1999. Particulars

Add: Add: Less: Less:

Cash flow from Operating Activities: Operating profit before working capital changes. Decrease in Stock [100000-(74000-20000)] Decrease in Debtors Decrease in Creditors Cash generated from operations Income taxes PAID Net cash from operating activities Cash flows from investing activities: Purchase of Machinery Proceeds from Sale of Machinery Net cash from investing activities Cash flows from financing activities Dividends paid Repayment of Bank Loan Net cash used in financing activities

Net increase in cash and cash equivalents Add: Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period (800 + 7800)

Rs.

Rs.

88,300 46,000 15,800 - 14,800 135,300 28,000 107,300

-

8,000 1,800 -

6,200

- 23,000 - 70,000 - 93,000 8,100 500 8,600