12th | Ts grewal 2021-2022 Question 37 to 40 | Cash Flow Statement

Page No 5.103:

Question 37:


Jalco Ltd. provided the following information, calculate Net Cash Flow from Financing Activities:

Particular

31st March,

2021 ( `)

31st March,

2020 ( `)

Equity Share Capital

12,00,000

10,00,000

12% Debentures

2,00,000

1,00,000

Additional Information:
1.Interest paid on debentures  ` 19,000.
2. Dividend paid in the year  ` 50,000.
3. During the year, XYZ Ltd. issued bonus shares in the ratio of 5 : 1 by captialising reserve.

Answer:


Cash Flow from Financing Activities

 

Particulars

Amount

( `)

Amount

( `)

 

Proceeds from Issue of 12% Debentures

1,00,000

 

 

Interest Paid

(19,000)

 

 

Dividend Paid

(50,000)

 

 

Net Cash Flows from Financing Activities

 

31,000

 

Note: Amount of Equity Share Capital has been increased due to the issue of Bonus Shares which does not involve any flow of cash. Therefore, it is not considered in the Financing Activities.

 


Page No 5.105:

Question 38:


From the following information, calculate Net Cash Flow from Operating Activities and Financing Activities:

Particular

31st March

2021

( `)

31st March

2020

( `)

Equity Share Capital

13,75,000

11,25,000

5% Preference Share Capital

5,00,000

7,50,000

General Reserve

3,75,000

3,00,000

Surplus i.e., Balance in Statement of Profit and Loss

3,75,000

(3,50,000)

Securities Premium Reserve

25,000

...

Provision for Tax

1,00,000

50,000

Non-current Liabilities (8% Debentures)

6,50,000

3,75,000

Short-term Borrowings (8% Bank Loan)

1,00,000

1,25,000

Trade Payables

5,00,000

2,50,000

Trade Receivables and Inventories

13,00,000

11,50,000

Additional Information:
(i) During the year additional debentures were issued at par on 1st October and Bank Loan was repaid on the same date.
(ii) Dividend on Equity Shares @ 8% was paid on Opening Balance.
(iii) Income tax `1,12,500 has been provided during the year.
(iv) Preference shares were redeemed at par at the end of the year.
 

Answer:


Cash Flow Statement

 

Particulars

Detail

 ( `)

 

Cash Flow from Operating Activities

Surplus i.e., Balance in Statement of Profit and Loss

 

 

 

Closing Surplus

 

3,75,000

 

Less:  Opening Surplus

 

(3,50,000)

 

Profit as per statement of P&L

 

7,25,000

 Add:

Reserve

75,000

 

 

Dividend Paid on Equity Shares

90,000

 

 

Dividend Paid on Preference Shares

25,000

 

 

Provision for Tax

1,12,500

3,02,500

 

 

 

10,27,500

 Add;

Interest on Debentures

41,000

 

 

Interest on Bank Loan

9,000

50,000

 

Operating Profit before Working Capital Adjustments

 

10,77,500

 Add:

Increase in liabilities

Trade Payable

 

2,50,000

 

 

 

13,27,500

 Less:

Increase in assets

Trade Receivables and Inventories

 

1,50,000

 

Cash Generated from Operation

 

11,77,500

Less:

Tax paid in current year

 

62,500

 

Cash Flow from Operating Activities

 

11,15,000

 

Cash Flow from Financing Activities

 

Proceeds from Issue of shares

2,50,000

 

 

Increase in Securities Premium Reserve

25,000

 

 

 

2,15,000

5,50,000

Less:

Payment for redemption of preference shares

(2,50,000)

 

 

Payment for Repayment of Loan

(25,000)

 

 

Dividend Paid on Equity Shares

(90,000)

 

 

Dividend Paid on Preference Shares

(25,000)

 

 

Interest on Debentures

(41,000)

 

 

Interest on Bank Loan

(9,000)

(4,40,000)

 

Cash Flow from Financing Activities

 

1,10,000

 

 

 

 

Working Notes:

Provision for Tax Account

Dr.

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Bank A/c (Bal. fig.)

62,500

Balance b/d

50,000

Balance c/d

1,00,000

Profit & Loss A/c

1,12,500

 

1,62,500

 

1,62,500

 

 

 

 


Calculation of Interest on Debentures

3,75,000×8/100=30,000

2,75,000×8/100×6/12=11,000

Total Interest=30,000+11,000=41,000 

Calculation of Interest on Bank Loan

1,25,000×8/100×6/12=5,000

1,00,000×8/100×6/12=4,000

Total Interest= 5,000+4,000=9,000

 


Page No 5.105:

Question 39:


From the following information, prepare Cash Flow Statement:

Particulars

( `)

Opening Cash and Bank Balances

1,50,000

Closing Cash and Bank Balances

1,70,000

Decrease in Stock

80,000

Increase in Bills Payable

1,20,000

Sale of Fixed Assets

3,00,000

Repayment of Long-term Loan

5,00,000

Net Profit for the Year

20,000

Answer:


Cash Flow Statement

 

Particulars

Amount

( `)

Amount

( `)

A

Cash Flow from Operating Activities

 

 

 

Profit as per Statement of Profit and Loss (Net Profit)

20,000

 

 

Profit Before Taxation

20,000

 

 

Items to be Added:

–

 

 

Operating Profit before Working Capital Adjustments

20,000

 

 

Add: Decrease in Current Assets

 

 

 

Stock

80,000

 

 

Add: Increase in Current Liabilities

 

 

 

Bills Payable

1,20,000

 

 

Cash Generated from Operations

2,20,000

 

 

Less: Tax Paid

–

 

 

Net Cash Flow from Operating Activities

 

2,20,000

 

 

 

 

 

B

Cash Flow from Investing Activities

 

 

 

 

Sale of Fixed Assets

3,00,000

 

 

Net Cash Flows from Investing Activities

 

3,00,000

 

 

 

 

C

Cash Flow from Financing Activities

 

 

 

Repayment of Long-Term Loan

(5,00,000)

 

 

Net Cash Used in Financing Activities

 

(5,00,000)

 

 

 

 

 

D

Net Increase or Decrease in Cash and Cash Equivalents

 

20,000

 

 

Add: Cash and Cash Equivalent in the beginning of the period

 

1,50,000

 

Cash and Cash Equivalents at the end of the period

 

1,70,000

 

 

 

 

 


Page No 5.105:

Question 40:


From the following Balance Sheet of Young India Ltd., prepare Cash Flow Statement:

BALANCE SHEET OF YOUNG INDIA LTD.
as at 31st March, 2021

Particular

Note No.

31st March, 2021 (`)

31st March, 2020 ( `)

I. EQUITY AND LIABILITIES

 

 

 

1. Shareholders' Funds

 

 

 

(a) Share Capital

 

2,50,000

2,00,000

(b) Reserves and Surplus: Surplus, i.e., Balance in Statement of Profit and Loss

 

1,83,000

82,000

2. Non-Current Liabilities

 

 

 

Long-term Borrowings:

 

 

 

15% Debentures

 

80,000

50,000

3. Current Liabilities

 

 

 

(a) Trade Payables

 

1,50,000

1,10,000

(b) Other Current Liabilities

 

12,000

20,000

Total

 

6,75,000

4,62,000

II. ASSETS

 

 

 

1. Non-Current Assets

 

 

 

(a) Fixed Assets (Tangible)

 

2,74,000

1,17,000

(b) Non-Current Investments

 

68,000

55,000

2. Current Assets

 

 

 

(a) Inventories

 

2,06,000

1,50,000

(b) Trade Receivables

 

32,000

70,000

(c) Cash and Cash Equivalents

 

95,000

70,000

Total

 

6,75,000

4,62,000

 

 

 

 

Answer:


Cash Flow Statement

for the year ended March 31, 2021

 

Particulars

Amount

( `)

Amount

( `)

A

Cash Flow from Operating Activities

 

 

 

Profit as per Statement of Profit and Loss (1,83,000 – 82,000)

1,01,000

 

 

Profit Before Taxation

1,01,000

 

 

Items to be Added:

 

 

 

Interest on Debentures

7,500

 

 

Operating Profit before Working Capital Adjustments

1,08,500

 

 

Less: Increase in Current Assets

 

 

 

Inventories

(56,000)

 

 

Add: Increase in Current Liabilities

 

 

 

Trade Payables

40,000

 

 

Less: Decrease in Current Liabilities

 

 

 

Other Current Liabilities

(8,000)

 

 

Add: Decrease in Current Assets

 

 

 

Trade Receivables

38,000

 

 

Cash Generated from Operations

1,22,500

 

 

Less: Tax Paid

–

 

 

Net Cash Flows from Operating Activities

 

1,22,500

 

 

 

 

B

Cash Flow from Investing Activities

 

 

 

Purchase of Fixed Assets

(1,57,000)

 

 

Purchase of Investments

(13,000)

 

 

Net Cash Used in Investing Activities

 

(1,70,000)

 

 

 

 

C

Cash Flow from Financing Activities

 

 

 

Proceeds from Issue of Equity Share Capital

50,000

 

 

Proceeds from Issue of 15% Debentures

30,000

 

 

Interest on Debentures (50,000 × 15%)

(7,500)

 

 

Net Cash Flow from Financing Activities

 

72,500

 

 

 

 

D

Net Increase or Decrease in Cash and Cash Equivalents

 

25,000

 

Add: Cash and Cash Equivalent in the beginning of the period

 

70,000

 

Cash and Cash Equivalents at the end of the period

 

95,000

 

 

 

 

 

Note: It has been assumed that Debentures were issued at the end of the accounting period. Therefore, interest on Debentures is computed on the opening balance of the Debenture.