ULTIMATE BOOK OF ACCOUNTANCY

(Author: Dr. Vinod Kumar, Publisher: Vishvas Publications)

Class - XII Accountancy (Text Book Solutions)

Chapter -05 (Part – B): Cash Flow Statement Part-7

Brilliant Problems
1. Cash Flow Statement

Profit during the year 10,000

Add: Transfer to General Reserve 12,500
Add: Tax provision 20,000
Add: Proposed Dividend 50,000
Add : Depreciation 31,250
Less: Profit on Sale (3,750)
Operating Profit before working capital changes 1,20,000
Add : Decrease in Trade Receivables 50,000
Less : Decrease in Trade Payable (30,000)
Less : Increase in Inventories (50,000)
90,000
Less : Tax (12,500)

Net Cash from Operating Activities 77,500

Cash Flow From Investing Activities

Proceeds from Sale of Plant & Machinery 8,750
Purchase of Land & Building (50,000)
Purchase of Plant and Machinery (86,250)
Purchase of Intangible Asset (25,000)
Net Cash Used in Investing Activities (1,52,500)

Cash Flow From Financing Activities

Issue of Share capital 50,000
Issue of Debentures 50,000
Proposed dividend (25,000)
Net Cash flow from Financing Activities 75,000

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 Working notes : Provision for Tax Account

Particulars Amount Particulars Amount

To Bank A/c (Tax paid) 12,500 By Balance b/d 17,500
To Balance c/d 25,000 By Statement of P/L 20,000
(bal. fig. provision)
37,500 37,500

Plant & Machinery Account

Particulars Amount Particulars Amount

To Balance b/d 1,25,000 By Bank A/c (sale) 8,750
To Statement of P/L 3,750 By Depreciation A/c 31,250
To Bank (bal. fig. purchase) 86,250 By balance c/d 1,75,000

2,15,000 2,15,000

2. Cash Flow Statement

Cash Flow from Operating Activities

Loss during the year (54,000)
Add : Depreciation 28,000
Operating Loss before working capital changes (26,000)
Add : Increase in Trade payable 8,000
Add : Other Current Liabilities 2,000
Less : Increase in Inventories (10,000)
Less : Increase in Trade Receivables (14,000)
Cash used in Operating Activities (40,000)

Cash Flow From Investing Activities

Sale of Machinery 6,000
Sale of investment 12,000
Purchase of machinery (74,000)

Net Cash Used in Investing Activities (56,000)

Cash Flow From Financing Activities

Issue of Share capital 60,000
Issue of Debentures 40,000

Net Cash flow from Financing Activities 1,00,000

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 Fixed Asset Account

Particulars Amount Particulars Amount

To Balance b/d 60,000 By Bank A/c (sale) 6,000
To Bank (bal. fig. purchase) 74,000 By Depreciation A/c 28,000
By balance c/d 1,00,000
1,34,000 1,34,000

3. Cash Flow Statement

Cash Flow from Operating Activities

Profit during the year 4,400
Add : Provision for tax 1,800
Add : Dividend paid 8,000
14,200
Add : Depreciation 14,000
Less : Profit on sale of investment (100)
Less : Profit on sale of fixed assets (400)
Operating profit before working capital changes 27,700
Add : Decrease in Inventories 6,000
Less : Increase in Trade Receivables (49,000)
Less : Decrease in Trade payable (6,800)
(22,100)
Less : Tax (14,800)
Cash used in Operating Activities (36,900)

Cash Flow From Investing Activities

Sale of investment 1,700
Sale of Fixed Assets 2,400
Purchase of investment (3,600)

Net Cash flow from Investing Activities 500

Cash Flow From Financing Activities

Mortgage Loan 54,000
Dividend (8,000)

Net Cash flow from Financing Activities 46,000

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 Working notes : Provision for Tax Account

Particulars Amount Particulars Amount

To Bank A/c (bal. Tax paid) 14,800 By Balance b/d 15,000
To Balance c/d 2,000 By Statement of P/L 1,800
(provision made)
16,800 16,800

Fixed Asset Account

Particulars Amount Particulars Amount

To Balance b/d 80,000 By Bank A/c (sale) 2,400
To Statement of P/L 400 By Depreciation A/c 14,000
By balance c/d 64,000
80,400 80,400

Investment Account

Particulars Amount Particulars Amount

To Balance b/d 10,000 By Bank A/c (sale) 1,700
To Statement of P/L 100 By balance c/d 12,000
To Bank (bal. fig. purchase) 3,600
13,700 13,700

4. Cash Flow Statement

Cash Flow from Operating Activities

Profit during the year 1,00,000
General Reserve 12,500
Add : Loss on issue of debentures 2,500
1,15,000
Add : Dividend on Equity Shares 15,000
Add : Dividend on Pref. shares (5%) 5,000
Add : Amortisation of Intangible Assets 1,250
Add : Interest on Debentures 50,000 x 6/12 x 8/100 = 2,000
75,000 x 6/12 x 8/100 = 3,000 5,000
Add : Premium on Redemption 25,000 x 10/100 2,500
Add : Depreciation 22,500
Operating profit before working capital changes 1,66,250
Less : Increase in Trade Receivables (40,000)
Cash flow from Operating Activities 1,26,250

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 Cash Flow From Investing Activities
Purchase of investment (16,250)
Purchase of fixed assets (82,500)

Net Cash flow from Investing Activities (98,750)

Cash Flow From Financing Activities

Issue of Debentures 25,000
Redemption of Pref. Shares (25,000)
Premium on Redemption (2,500)
Dividend on Equity (15,000)
Dividend on Pref. shares (5,000)
Interest on Debentures (5,000)

Net Cash flow from Financing Activities (27,500)

Fixed Asset Account

Particulars Amount Particulars Amount

To Balance b/d 1,80,000 By Depreciation A/c 22,500
To Bank (Bal. fig. purchase) 82,500 By balance c/d 2,40,000
2,62,500 2,62,500

5. Cash Flow Statement

Cash Flow from Operating Activities

Profit during the year 1,00,000
Add : Proposed Dividend 50,000
Add : Depreciation 50,000
Less : Profit on sale (3,000
Operating profit before working capital changes 1,97,000
Less : Increase in Inventories (25,000)
Cash flow from Operating Activities 1,72,000

Cash Flow From Investing Activities

Sale of Plant & Machinery 8,000
Purchase of Plant & Machinery (3,55,000)

Net Cash use in Investing Activities (3,47,000)

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 Cash Flow From Financing Activities
Issue of Shares 3,00,000
Dividend (40,000)

Net Cash flow from Financing Activities 2,60,000

Fixed Asset Account

Particulars Amount Particulars Amount

To Balance b/d 5,00,000 By Depreciation A/c 50,000
To Statement of P/L (profit) 3,000 By Bank (sale) 8,000
To Bank (Bal. fig. purchase) 3,55,000 By balance c/d 8,00,000
8,58,000 8,58,000

6. Cash Flow Statement

Cash Flow from Operating Activities

Profit during the year 14,400
Transfer to Reserve 24,000
Add : Provision for Tax 36,000
Add : Proposed Dividend 40,000
Add : Interim Dividend 16,000
1,30,400
Add : Depreciation on Plant & Machinery 8,000
Add : Depreciation on Land & Building 16,000
Operating profit before working capital changes 1,54,400
Add : Increase in Sundry Creditors 22,400
Less : Decrease in Bills Payable (3,200)
Less : Increase in Sundry Debtors (32,000)
Less : Increase in Bills Receivable (8,000)
Less : Increase in inventories (25,600
1,08,000
Less : Tax (28,000)
Cash flow from Operating Activities 80,000

Cash Flow From Investing Activities

Sale of Land & Building 8,000
Sale of Investment 20,000
Purchase of plant & machinery (1,04,000)

Net Cash flow from Investing Activities (76,000)

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 Cash Flow From Financing Activities
Equity Share Capital issued 80,000
Dividend paid (16,000)
Pref. Shares redeemed (40,000)
Proposed dividend (33,600)

Net Cash flow from Financing Activities (9,600)

Working notes : Provision for Tax Account

Particulars Amount Particulars Amount

To Bank A/c (Tax paid) 28,000 By Balance b/d 32,000
To Balance c/d 40,000 By Statement of P/L 36,000
(bal. fig. provision made)
68,000 68,000

Plant & Machinery Account

Particulars Amount Particulars Amount

To Balance b/d 64,000 By Depreciation A/c 8,000
To Bank (bal.fig.purchase) 1,04,000 By balance c/d 1,60,000
1,68,000 1,68,000

Land and Building Account

Particulars Amount Particulars Amount

To Balance b/d 1,60,000 By Depreciation A/c 16,000
By Bank (sale bal. fig) 8,000
By balance c/d 1,36,000
1,60,000 1,60,000

7. Working notes
Plant & Machinery Account

Particulars Amount Particulars Amount

To Balance b/d 2,30,000 By Bank (sale) 8,000
(2,00,000 + 30,000) By Statement of P/L 2,000
To Bank (bal.fig.purchase) 1,25,000 By Accumulated Dep 5,000
By Balance c/d 3,40,000
(2,90,000 + 50,000)
3,55,000 3,55,000

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Provision for Depreciation Account

Particulars Amount Particulars Amount

To Plant & Machinery A/c 5,000 By Balance b/d 30,000
To balance c/d 50,000 By Statement of P/L 25,000
(Dep. bal. fig)
55,000 55,000

8. Cash Flow Statement

Cash Flow from Operating Activities

Profit during the year 2,00,000
Add : Transfer to Reserve 28,000
Add : Provision for tax 3,20,000
5,48,000
Add : Preliminary expenses written off 20,000
Add : Depreciation 40,000
Add : Loss on Sale of furniture 2,000
Less : Profit on sale of machinery (12,000)
Operating profit before working capital changes 5,98,000
Add : Decrease in Bills Receivable 6,000
Less : Increase in Debtors (12,000)
Less : Increase in Prepaid Expenses (400)
Add : Increase in creditors 20,000
Less : Decrease in Bills payable (8,000)
6,03,600
Less : Tax 3,20,000
Cash used in Operating Activities 2,83,600

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“ULTIMATE BOOK OF ACCOUNTANCY” class 12th
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