1. Following is the Balance Sheet of X Ltd.

as at 31st March, 2018:

Particulars 31st March, 31st March,

Note
2018 2017
No.
(₹) (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 19,00,000 17,00,000
(b) Reserves and Surplus 1 6,00,000 3,00,000
2. Non-Current Liabilities
Long-term Borrowings 2 5,00,000 4,00,000
3. Current Liabilities
(a) Short-term Borrowings 3 1,70,000 1,75,000
(b) Short-term Provisions 4 2,00,000 1,65,000
Total   33,70,000 27,40,000
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets:
(i) Tangible Assets 5 24,00,000 19,00,000
(ii) Intangible Assets 6 2,00,000 3,00,000
(b) Non-Current Investments 3,00,000 2,00,000
2. Current Assets
(a) Current Investments 1,40,000 1,70,000
(b) Inventories 2,60,000 1,30,000
(c) Cash and Cash Equivalents 70,000 40,000
Total 33,70,000 27,40,000

Notes to Accounts
31st March 31st March
Particular 2018 2017
(₹) (₹)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit and Loss 6,00,000 3,00,000
  6,00,000 3,00,000
2. Long-term Borrowings
12% Debentures 5,00,000 4,00,000
5,00,000 4,00,000
3. Short-term Borrowings
Bank Overdraft 1,70,000 1,75,000
   1,70,000 1,75,000
4. Short-term Provisions
Provision for Tax 2,00,000 1,65,000
  2,00,000 1,65,000
5. Tangible Assets
Machinery 26,00,000 20,00,000
  Less: Accumulated Depreciation (2,00,000) (1,00,000)
  24,00,000 19,00,000
6. Intangible Assets
Goodwill 2,00,000 3,00,000
2,00,000 3,00,000

Additional Information:
1. ₹ 1,00,000, 12% Debentures were issued on 1st April, 2017.
2. During the year, a piece of machinery costing ₹80,000 on which accumulated depreciation
was ₹ 40,000 was sold at a gain of ₹ 10,000.
Prepare Cash Flow Statement.

SOLUTION:

Cash Flow Statement

 
Particulars Detail `
I.                   Cash  flow from operating activities
 
Net profit as per Statement of profit and loss 3,00,000
(6,00,000-3,00,000)  
 Add:  
Provision for Tax   2,00,000
Net profit before tax and extraordinary items   5,00,000
Add:   ,
Depreciation on Machinery 1,40,000  
Goodwill amortised 1,00,000  
Interest on debentures 60,000 3,00,000
Less: 8,00,000
Gain on Sale of machinery   (10,000)
Operating Profit Before Working Capital
Changes   7,90,000
Less:    
Inventories   (1,30,000)
Cash Generated from operation   6,60,000
Less: Tax paid   (1,65,000)
Cash flow from operating activities   4,95,000
     
 II.                Cash  flow from Investing activities
 
Proceeds From sale of Machinery 50,000
Payments for the purchase of Machinery (6,80,000)
Payments for the purchase of Current Investment (1,00,000)
Cash Used in Investing activities   (7,30,000)
III.             Cash flow from Financing activities
 
Proceeds from Issue of Shares 2,00,000
Proceeds from Issue of Debenture   1,00,000
Decrease in Bank Overdraft   (5,000)
Payment of Interest on Debenture   (60,000)
Cash used in Financing activities   2,35,000
Net Decrease in Cash and cash equivalents Nil
Add: Opening Cash and Cash Equivalents   2,10,000
Closing Cash and Cash Equivalents   2,10,000
Working notes:
Dr. Fixed Assets A/c Cr.
Particulars ` Particulars `
To Balance B/d 20,00,000 By Provision for Dep. a/c 40,000
To P&L a/c (Gain on sale) 40,000 By Bank a/c (sale) 50,000
To Bank a/c (Purchase) 6,80,000 By Balance C/d 26,00,000
  26,90,000   26,90,000
Space
Dr. Provision for Depreciation A/c Cr.
Particulars ` Particulars `
By Balance B/d 1,00,000
To Machinery a/c 40,000 By P&L a/c 1,40,000
To Balance C/d 2,00,000 (Dep. provided during the year)  
  2,40,000   2,40,000