Funds and Flow Statement

Problem No.1

From the Following Balance Sheet of M/s X Ltd. You are required to
prepare a Schedule of Changes in Working Capital and Funds Flow
Statement.

Liabilities 31-12-00 31-12-01 Assets 31-12-00 31-12-01

Share Capital 32,000 34,000 Land & Building 20,000 20,000
Profit & Loss A/c 5,800 9,800 Plant & Machinery 9,600 13,600
Creditors 3,600 2,000 Stock 3,600 2,800
Mortgage Loan ---- 2,000 Debtors 6,600 7,800
Cash at Bank 1,600 3,600
41,400 47,800 41,400 47,800

Problem No.2

You are given below Balance Sheets of M/s Y Ltd.

Liabilities 31-03-01 31-03-02 Assets 31-03- 31-03-02

01
Share Capital 20,000 22,000 Land & Building 4,000 4,000
Profit & Loss A/c 1,000 2,300 Plant & Machinery 1,000 2,600
5 % Debentures ----- 3,000 Stock 8,000 9,000
Accounts Payable 7,000 4,500 Accounts Receivable 12,000 11,500
Cash 3,000 4,700
28,000 31,800 28,000 31,800

You are Required to Prepare :

1. Statement Showing Changes in working capital and

2. Statement of source and uses of funds.
 Problem No.3
From the Following Balance Sheet of M/S. Ulta Pulta ltd. As on 31 st March
2004 and, 2005,You are required to Prepare :–
1. A Statement of source & application of found.
2. A Statement of change in working capital.

Liabilities 31-03-04 31-03-05 Assets 31-03-04 31-03-05

Rs. Rs.

Share Capital 2,00,000 2,50,000 Land & Building 2,00,000 1,90,000

General Reserve 50,000 60,000 Plant 1,50,000 1,69,000
P&L A/c 30,500 30,600 Furniture 40,000 45,000
12 % Debentures 70,000 ---- Stock 1,00,000 74,000
Creditors 1,50,000 1,35,200 Debtors 80,000 69,200
Provision for Tax 30,000 35,000 Cash 500 600
Outstanding Exp. 5,000 3,000 Bank ---- 8,000
Proposed Dividend 40,000 45,000 Preliminary Exp. 5,000 3,000

5,75,500 5,58,800 5,75,500 5,58,800

Additional Information:
1. Income Tax provision made during the year was Rs.33,000.
2. Depreciation written off Plant Rs.14,000., Land & Building Rs.10,000 and
Furniture Rs.5,000.
3. Furniture Purchased during the year Rs.20,000.

Problem No.4
The Balance Sheet of M/S. Micky mouse ltd. For the year ended 31 st March
2004
and 2005 are a follow :
Liabilities 2003-04 2004-05 Assets 2003-04 2004-05
Equity Sh. Cap. 32,000 48,000 Premises 22,160 45,280
Share Premium 3,200 4,800 Plant & Mach. 14,240 20,520
G. Reserve 2,400 3,600 Furniture & 960 600
Fixture
P & L A/c 7,800 8,320 Stock 8,840 10,400
15 % Debentures ---- 10,400 Debtors 14,600 15,640
Income Tax Provision 3,920 4,360 Bank Bal. 1,920 1,600
Creditors 13,400 14,560
62,720 94,040 62,720 94,040
Depreciation Written off the Year 2004-05 was as follows.
Plant & Machinery Rs.5,120.
Furniture and Fixture Rs. 160.
Prepare a Statement of Sources & Application of Funds.
 Problem No.5
From the Following Balance Sheet of Pune Ltd. As on 31 st March,2004 and
st
31 March 2005 Prepare as –
1. Statement showing changes in working capital and
2. Sources & Application of Fund Statement.
Liabilities 2003-04 2004-05 Assets 2003-04 2004-05
Share Capital 9,00,000 9,00,000 Fixed Assets 8,00,000 6,40,000
Sundry Creditors 3,36,000 2,68,000 Investments 1,00,000 1,20,000
Tax Provision 1,50,000 20,000 Stock 4,80,000 4,20,000
General Reserve 6,00,000 6,20,000 Debtors 4,20,000 9,10,000
Profit & Loss A/c 1,12,000 1,36,000 Cash & Bank Bal. 2,98,000 3,94,000
Mortgage Loan ----- 5,40,000
20,98,000 24,84,000 20,98,000 24,84,000

Additional Information :

1.The net Profit the Year was Rs.1,24,000. After charging depreciation on fixed
assets Rs.1,40,000. And Provision for tax Rs.20,000.
2. During the Year part of the fixed assets costing Rs.20,000 Were disposed off for
Rs.24,000 and the profit is included in the above profit.
3. Dividend paid during the year amounted to Rs.80,000.
4. Investment costing Rs.16,000 were sold for Rs.17,000 and further investment
were acquired for Rs.36,000.

Problem No.6
The Balance Sheet of M/s Johnson Ltd. As on 31 st December 2003&2004
are as under.

Liabilities 2003 2004 Assets 2003 2004

Share Capital 2,50,000 3,50,000 Land & Buildings 40,000 60,000
P&L A/c 50,000 80,000 Plant & Mac. 2,50,000 4,00,000
General Reserve 25,000 35,000 Investment 40,000 45,000
Creditors 76,500 95,000 Stock 50,000 37,500
Bills Payable 20,000 25,000 Debtors 75,000 80,000
Outstanding Exp. 3,500 2,500 Cash 10,000 10,000
Provision for taxation 40,000 45,000
4,65,000 6,32,500 4,65,000 6,32,500
Additional Information :
1. Depreciation charged on Plant & Machinery during 2004 amounted to
Rs.25,000 Tax paid during the year Rs.38,000.
2. A machinery costing Rs.2,500 was sold for RS.4,000 during 2001.
3. Invetment costing Rs.10,000 were sold for Rs.5000.
4. Dividend (Interim) Paid during the year RS.12,500. Prepare Funds Flow
Statement.
Problem No. 7
The following are the summarized balance of Ashok ltd., Kolhapur.
Liabilities 31-03-2004 31-03-2005
Rs. Rs.
Share Capital
Equity Shares of Rs.10 each 5,00,000 5,80,000
Share premium ---- 20,000
General Reserves 60,000 1,00,000
Profit & Loss A/c 96,000 1,36,000
12 % Debentures 1,00,000 -----
Creditors 2,60,000 2,80,000
Proposed Dividend 40,000 48,000
Total 10,56,000 11,64,000
Assets Rs. Rs. Rs. Rs.
Building 3,10,000 3,80,000
Plant Cost 5,80,000 ------ 6,40,000 -----
Less : Depreciation 2,80,000 3,00,000 3,00,000 3,40,000
Equipment Cost 18,000 ------ 20,000 ------
Less : Depreciation 12,000 6,000 8,000 12,000
Inventories 2,60,000 2,10,000
Debtors 1,50,000 1,70,000
Cash 30,000 52,000

Total 1,056,000 11,64,000

Additional Information :

1.The plant which costs Rs.40,000 and in respect of which Rs.26,000 had been
written off as depreciation was sold during the year 2004-05 for Rs.6,000
2. Equipment which cost RS.10,000 and in respect of which RS.8,000 had been
written off as depreciation was sold for Rs.4000 during 2004-05.
3. The dividend which was declared in 2000 was paid during 2004-05.

You are required to prepare :

1.Statement of Changes in working capital
2.Funds Flow Statement.

Problem No. 8
From the Following balance of M/s NIKI TASHA LTD. And the budgeted
Balance Sheet as on 31-02-2005 prepare a Funds Flow statement a estimated.

Liabilities 31-03-2004 31-03-2005

Equity Share Capital 20,00,000 25,00,000
Share Premium ---- 1,00,000
Profit on sale of leasehold Property ---- 25,000
Profit on Redemption of Debentures ---- 4,000
Profit & Loss A/C 4,50,000 4,50,000
 Profit for the year before tax ---- 4,85,000
15 % Debentures 5,00,000 4,00,000
Creditors 6,40,000 5,90,000
Reserve for income-Tax 3,10,000 31,200
Proposed Dividends 1,00,000 ------
40,00,000 45,85,200

Assets
Freehold Property 14,50,000 18,50,000
Leasehold Property 50,000
Plant & Machinery 18,00,000 21,00,000
Less: Depreciation 7,20,000 10,80,000 9,30,000 11,70,000
Investment 1,60,000 2,24,000
Work –in- Progress 1,70,000 1,50,000

Stock in trade 2,70,000 3,60,000

Debtors 6,20,000 6,47,200
Bank 200,000 1,84,000

40,00,000 45,85,200

During 2004-05 in it anticipated that plant costing Rs.1,30,000

(Depreciation Rs.90,000.) Will be sold for Rs.30, 000. This transaction has been
allowed for in Preparing the estimated Balance sheet as at 31-03-2005. The loss
on sale being charged profit for the year.
 Problem No.9
You have been given the following financial statement of M/s. Thompson
Ltd. As on 31st March.

Liabilities 2005 Rs. 2004 Rs. Assets 2005 Rs. 2004Rs.

Ordinary Share Capital 92,000 78,800 Cash at Bank 18,000 52,000
(of Rs.10 each.)
Reserve & Surplus 1,24,800 59,200 Debtors 56,000 36,280
Secured Loan ---- 34,800 Stock in trade 78,400 57,000
Provision for Taxation 68,800 26,000 Fixed Assets
Sundry Creditors 1,19,200 1,00,580 Less: Dep 2,40,000 1,44,000
Investments 4,000 4,500
Prepaid Exp. 8,400 5,600
4,04,800 2,99,380 4,04,800 2,99,380

The following further information is available from the records :

1. The position in respect of reserve & surplus is as under :

Rs.

Balance on 1-4-2005 59,200

Net Profit for the year 2004-05 79,400
1,38,600
Less: Dividend 13,800
1,24,800

2. On 31-03-2005 the accumulated depreciation on fixed assets was Rs.72,000

and on 31-12-2000 Rs.64,000 Machinery costing Rs.8,000 Which of half
depreciated, was discarded and written off and included in depreciation for the
year Rs.12,000.

3. Investments costing Rs.2,000 were sold during the year 2004-05 for Rs.1,920
and the Government securities of the face value Rs.16,000 were purchased
during the year for Rs.1,500.
Prepare : 1. Statement of source and application of found.
3. Statement showing in detail the item-wise increase and decrease in the net
working capital
 Problem No.10
From the following summarized Balance Sheets of M/s. Karamchand Co.
Ltd. As at 31st March,2004 and 31st March,2005 and other information furnished.
Prepare statement of Sources and Application of Founds for the year ended 31 st
March, 2005.

Liabilities 2004-05 2003-04 Assets 2004-05 2003-04

Share Capital 4,50,000 3,75,000 Fixed Assets 6,30,000 3,60,000

Reserves & Surplus 3,75,000 1,80,000 Investments 22,500 27,000
Secured Loans ---- 1,12,500 Stock 2,40,000 87,750
Sundry Creditors 2,85,000 2,62,500 Sundry Debtors 1,38,000 2,05,500
Provision for Taxation 1,12,500 37,500 Cash at Bank 1,80,000 2,77,500
Prepaid Exp. 12,000 9,750

12,22,500 9,67,500 12,22,500 9,67,500

Additional Information:

a) On 31st March 2005 accumulated depreciation on fixed amounted to

Rs.1,80,000 and 31st March2004 Rs1,65,000.
b) Machinery costing Rs.15,000 (accumulated depreciation thereon being
Rs.7,500) was discarded and written off during 2004-05.
c) Depreciation written off during 2004-05 amounted to Rs.22,500.
d) During the year 2004-05,Investment costing Rs.9,000 were sold for Rs.10,500.
e) The balance in the Reserve and Surplus A/c on 31 st March,2005 is arrived as
follows :
Rs.
st
Balance on 1 April,2004 1,80,000
Net Profits for the year 2004-05 2,62,500
Less : Dividend 4,42,500
67,500
3,75,000
 Problem No.11
Following are the summarized balance sheets of Anmol Ltd. As on 31 st
March, 2004 and 2005 respectively.
Liabilities 2004 2005 Assets 2004 2005

Share Capital 2,00,000 2,50,000 Land &Building 2,00,000 1,90,000

General Reserve 50,000 60,000 Machinery 1,50,000 1,68,000
P&L A/c 30,500 30,600 Stock 1,00,000 74,000
Bank Loan (Long Term) 70,000 ---- Sundry Debtors 78,200 64,000
Sundry Creditors 1,40,000 1,30,000 Prepaid Insurance 1,800 1,200
Outstanding Exp. 10,000 5,200 Cash Balance 500 600
Provision for Taxation 30,000 35,000 Bills Receivable ---- 8,000
Goodwill 5,000
Total 5,30,500 5,10,800 5,30,500 5,10,800
Additional Information :
During the year 2004-05
1. Dividend of Rs.20,000 was paid.
2. Following assets were purchased from other company-Stock of Rs.10,000 and
Machinery of Rs.35,000. Purchase price paid by issue of shares of Rs.50,000.
3. Depreciation written off machinery Rs.15,000.
4. Loss on sale of machinery Rs.600 was charged to general reserve.
5. Income tax provided during the year Rs.32,000
Prepare - Funds Flow Statement.

Problem No.12
Following are the summarized balance sheet of DEMPO LTD. As on 31 st
March,2004 and 31st March,2005.
Liabilities 2003-04 2004-05 Assets 2003-04 2004-05

Share Capital 80,000 1,00,000 Land & Building 80,000 76,000

General Reserve 20,000 24,000 Machinery 60,000 67,600
P&L A/c 12,200 12,240 Stock 40,000 29,600
Bank Loan (Long term) 28,000 - Sundry Debtors 32,000 25,680
Sundry Creditors 60,000 54,080 Cash 200 240
Provision for Taxation 12,000 14,000 Bank - 3,200
Goodwill - 2,000
2,12,200 2,04,320 2,12,200 2,04,320
Additional Information during the year ended 2004-05.
1.Dividend of Rs.9,200 was paid.
2.Assets of another company were purchased as follows
Stock- Rs 8,000 Machinery Rs.10,000
The Purchase price amounting to Rs.20,000 was paid by the issue of shares.
3.One more machinery was purchased for Rs.3,200
4.Income Tax provided during the year Rs.13,200.
5.Loss on sale of Machine Rs.80 was written off to General Reserve.
Prepare Funds Flow Statement.
 Problem No.13
The comparative Balance sheets of H for two year are as follows.
Liabilities 2004 2005 Assets 2004 2005
Loan form wife ----- 20,000 Cash 11,000 15,000
Bills Payable 12,000 8,000 Debtors 40,000 35,000
Creditors 25,000 52,000 Stock 25,000 30,000
Bank Loan 43,000 60,000 Machinery 20,000 14,000
Capital 66,000 34,000 Land & Bldg. 50,000 80,000
Total 1,46,000 1,74,000 1,46,000 1,74,000

Additional Information :
1) Net Loss for the year 2005 amounted to Rs.13,000.
2) During the year a Machine costing Rs.5,000 (accumulated depreciation
Rs.2,000.) was sold for Rs.2,500.
3) The provision for depreciation against Machinery was Rs.6,000 and Rs.7,000
for respective years.
Prepare funds Flow statement.

Problem No.14
Balance sheets of M/s Ghanshamdas as on 1 st April, 2004 and 31st March,
2005 were as follows.

Liabilities 1-04-04 31-03-05 Assets 1-04-04 31-03-05

Creditors 1,00,000 1,10,000 Cash 25,000 17,500

Mrs.Ghanshamdas Loan 62,500 - Debtors 75,000 1,25,000
Loan From Bank 1,00,000 1,25,000 Stock 87,500 62,500
Capital 3,12,500 3,82,500 Machinery 2,00,000 1,37,500
Land 1,00,000 1,25,000
Building 87,500 1,50,000

Total 5,75,000 6,17,500 Total 5,75,000 6,17,500

During the year machine costing Rs. 25,000 (accumulated
depreciation Rs.7,500.)was sold for Rs.12,500. The provision for
depreciation against machinery as 1st Jan 2001 was Rs.62,500 and on 31st
March, 2005 Rs.1,00,000.
Net Profit for the year 2004-05 amounted to Rs.1,12,500.
Prepare Funds Flow Statement.
 Problem No.15

The Comparative Balance Sheets of M/s.Hind Trading Corporation

Ltd. As on 1st April, 2004 and 31st March 2005 were as under.

Balance Sheets
Liabilities 01-04-04 31-03-05 Assets 01-04-04 31-03-05

Equity Share Capital 2,50,000 4,00,000 Goodwill 30,000 15,000

12% Redeemable 2,00,0000 1,00,000 Fixed Assets (Cost) 6,00,000 6,50,000
Preferential Sh. Capital
General Reserve 1,37,500 1,40,000 Investment at cost 1,25,000 62,500
Capital Reserve ---- 5,000 Stock 69,500 2,13,500
P & L A/c 25,000 41,500 S. Debtors 2,40,500 2,22,500
15 % Debentures 80,000 50,000 Cash & Bank 61,000 60,000
Sundry Creditors 1,66,000 2,32,500 Preliminary Exp. 9,000 ----
Provision for Taxation 62,500 40,000 Premium on ---- 1,500
Redemption of
Debentures
Dividend 36,000 18,000
Outstanding Exp. 43,000 23,000
Accumulated 1,35,000 1,75,000
Depreciation on Fixed
Assets
Total 11,35,000 12,25,000 11,35,000 12,25,000

Additional Information :

a) The Net Profit for the year 2004-05 (after making provision Rs.35,000
writing of Preliminary expenses and premium on redemption of
debentures Rs.9,000 and Rs.1500. respectively) amounted to Rs.45,000.
b) A Portion of companies Investment amounting to Rs.52,500/- has become
worthless and was written off to General Reserve. Some investment was
sold at a profit, which has been credited to Capital Reserve.
c) During the year company paid an interim dividend of Rs.12,500/- and
directors have recommended a final dividend of Rs.18,000.
d) Preference share redemption was carried out at a premium of 5% on 1-
4-2004.The premium being written off.
e) Actual Premium on redemption of debentures was Rs.3,000 of which half
had been written off
f) The Goodwill has been written off to General Reserve.
Prepare Funds Flow Statement.
 Problem No.16
The comparative Balance Sheet of M/s Maharashtra Trading corporation ltd. As
on 31st March,2004 and 31stMarch,2005 were under.
Liabilities 2003-04 2004-05 Assets 2003-04 2004-05
Share Capital 1,44,000 1,60,000 Fixed Assets 1,92,000 2,08,000
General Reserve 44,000 24,000 Less: Dep. 43,200 56,000
Surplus in P & l A/c 8,180 13,380 1,48,800 1,52,000
Current Liabilities Investment cost 40,000 20,000
Sundry Creditors 53,460 78,140 Debtors 22,240 36,200
Provision for Taxation 20,000 12,800 Cash & Bank 19,920 19,000
Proposed Dividend 11,520 6,000 Stocks 47,320 67,120
Preliminary Exp. 2,880 ----
Total 2,81,160 2,94,320 2,81,160 1,94,320
Additional Information:
a) The net profits for the year 2004-05 ( after making provision for taxation
Rs.12,800/- writing off preliminary expenses Rs.2,880/- and providing
depreciation Rs.16,000/-) amounting to Rs.15,200/-
b) The company sold during the year old machinery costing Rs.3,600/- for
Rs.1,200/- The accumulated depreciation on the said machinery was
Rs.3,200/-
c) A portion of company’s investment has become worthless and was
written off to General Reserve The cost of these investments was
Rs.20,000/-
d) During the year company paid an interim dividend of Rs.4,000/- and
Director have recommended a final dividend of Rs.6,000 for the year
2004-05.
Prepare a Statement of Sources and Application of Funds for the year
ended 31st March 2002 and Schedule of working capital Changes.
 Problem No.17
The following are the Balance Sheet of Commerce Collage limited as at 31 st
March,2005 and 2004.
Liabilities 31-3-04 31-3-05 Assets 31-3-04 31-03-05
Share Capital 1,20,000 1,56,000 Goodwill ---- 12,000
Reserves 30,000 35,000 Land & Buildings 89,100 86,550
Profit & Loss 23,814 24,732 Plant & Machinery 67,770 69,720
Sundry Creditors 23,700 19,681 Cash 1,500 1,620
Bills Payable 20,268 6,915 Sundry Debtors 51,105 43,575
Bank overdraft 35,706 ---- Sundry Advance 1,389 441
Provision for Tax 24,000 30,000 Stock 66,624 58,422

Total 2,77,488 2,72,328 2,77,488 2,72,328

The following additional information is obtained –

1. During the year ended 31st March 2005 an interim dividend of

Rs.16,000/- was paid.
2. The assets & Liabilities of another company were purchased for
Rs.36,000/- payable in fully paid shares of the company . These assets
consisted of Stock Rs.14,984/-,Machinery Rs.11,016/- and Goodwill
Rs.12,000/- & Creditors Rs.2,000.Additional Plant for Rs.3,390/- was
purchased
3. Income Tax paid during the year amounted to Rs.15,000/-
You are required to prepare a statement showing the sources and
application for funds for the year ending 31st March, 2005 and a
schedule of changes in working capital.
 Problem No.18

The comparative Balance Sheet of limited company are given below.

Liabilities 2003-04 2004-05 Assets 2003-04 2004-05

Share Capital 72,000 80,000 Fixed Assets 96,000 1,04,000
General Reserves 22,000 12,000 Less: Dep. 21,600 28,000
Profit & Loss 4,090 6,690 Net Block 74,400 76,000
Sundry Creditors 26,730 39,070 Investments 20,000 10,000
Proposed Dividend 5,760 3,000 Stocks 11,120 18,100
Provision for Tax 10,000 6,400 Debtors 23,660 33,560
Bank Balances 11,400 9,500
Total 1,40,580 1,47,160 1,40,580 1,47,160

Other Information:
1. During the year the company sold old machinery costing Rs.1,800/- for
Rs.600/-. The accumulated depreciation on this machinery was
Rs.1,600/-.
2. A portion of company’s investment become worthless and was written off
to General Reserve. The cost of such investment was Rs.10,000/-.
3. Income Tax paid was Rs.11,000.
You are required to prepare a schedule for changes in working
capital and statement of sources and application of funds for the year
ended 31st March 2005.
 Problem No.19
The Balance Sheet of barest Ltd. As on 31st March, 2005 and 31st
march, 2004 are as follows:
Liabilities 2005 2004 Assets 2005 2004
Share Capital 2,00,000 1,00,000 Goodwill 10,000 15,000
General Reserve 68,250 63,250 Building 40,000 20,000
Debentures ---- 50,000 Machinery 2,40,000 1,50,000
Depreciation Fund 55,000 50,000 Debtors 80,000 75,000
Sundry Creditors 1,14,850 1,22,750 Cash 28,000 29,000
Accrued Expenses 18,000 9,000 Prepaid Exp. 3,500 3,000
Bank Overdraft 5,400 5,000 Stock 60,000 1,08,000

Total 4,61,500 4,00,000 4,61,500 4,00,000

Sales for the year 2004-05 were Rs.10,50,000/-In arriving at the net
profit items deducted from sales included among others: Cost of Goods Sold
Rs.8,25,000/-Depreciation on machinery Rs.25,000/- Wages & Salaries
Rs.1,00,000/- and profit of Rs.5,000,/- on the sale of Machinery.
The Machinery had cost of Rs. 30,000/-depreciation of Rs 20,000/-
had been accumulated for it and it was sold for Rs.15,000.
The company declared and paid Rs.30,000/- as dividends during the
year 2004-05.
Debentures were redeemed for Rs.49, 000/- on 31st March 2005
You are required to prepare:
1.Statement showing in detail item-wise increases and decreases in the
working capital.
2.Statement of Source and Application of Funds.
3.Other working notes.