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Question:

From the following Balance Sheet of JY Ltd. as at 31st March 2017, prepare a Cash Flow Statement:
Balance Sheet of JY Ltd. as at 31.03.2017

Particulars Note No. 31.3.2017 (Rs.) 31.3.2016 (Rs.)
I- Equity and Liabilities:-
  1. Share holder's Funds: | | |
    (a) Share Capital | | 5,00,000 | 5,00,000
    (b) Reserve and Surplus | 1 | 1,00,000 | (25,000)
  2. Non-Current Liabilities: | | |
    Long-term Borrowings | 2 | 2,50,000 | 1,50,000
  3. Current Liabilities: | | |
    (a) Short-term Borrowings | 3 | 1,50,000 | 1,00,000
    (b) Short-term Provisions | 4 | 2,00,000 | 1,25,000
    Total | | 12,00,000 | 8,50,000
    II- Assets:- | | |
  4. Non-Current Assets: | | |
    (a) Fixed Assets: | | |
    (i) Tangible | 5 | 6,00,000 | 4,50,000
  5. Current Assets: | | |
    (a) Trade Receivables | | 2,75,000 | 2,25,000
    (b) Cash and Cash Equivalents | | 1,25,000 | 75,000
    (c) Short-term Loans and Advances | | 2,00,000 | 1,00,000
    Total | | 12,00,000 | 8,50,000
    Notes to Accounts:
    Notes No. Particulars 31.3.2017 31.3.2016
  6. Reserves and Surplus: | (Surplus, i.e., Balance in the Statement of Profit and Loss) | 1,00,000 | (25,000)

Solution:

JY Ltd.
Cash Flow Statement for the year ended 31.3.2017

Particulars Details Amount
Net profit during year 1,25,000
Add: Provision for tax 1,25,000
Proposed dividend 75,000
2,00,000
Net profit before tax and extra-ordinary items 3,25,000
Adjustment of non-operating and non-cash items:
Add: Accumulated depreciation 62,500
Interest on debenture (WN-1) 15,000
77,500
Operating profit before working capital changes 4,02,500
Add: Increase in current liabilities and decrease in current assets
Less: Decrease in CL and increase in CA
Trade receivables -50,000
Short term loans and advances -1,00,000
Cash generated from operation 2,52,500
Less: Income tax -75,000
A: Cash flow from operating activities 1,77,500
Machinery purchased -2,12,500
B: Cash used in investing activities -2,12,500
Proceeds from issue of debenture 1,00,000
Proposed dividend -50,000
Interest on debenture -15,000
Issue of bank loan 50,000
C: Cash flow from financing activities 85,000
Net increase in cash and cash equivalents (A+B+C) 50,000
Add: Opening cash and cash equivalents 75,000
Closing cash and cash equivalents 1,25,000
Working note:
(a) Interest on debenture = 1,50,000 X 10/100 = Rs. 15,000