CashPloWS

Closing P&L A/c Balance Statement of Mr. Thirumalai

Less: Opening P&L Alc Balance Rs Soation Cash Flow
For the year 1999
80,000
S0000 P a r t i c u l a r s
Rs Rs.

Add: Transfer to General Reserve "ating activities.

30,000 h F l o w s f r o mo p e r a t

(24,000)
Net Profit 10,000 C a s h

Net
Loss
for the y e a r

M d u s t m e n t sF o r

40,000 on Machinery (W.N.I) 7,000

3) Comprehensive Cash Flow Statements Depreciation
Machinery
Sale of
(A)Cash Flow Statement of Sole Traders & Loss
on
4,000
Ilustration 11 Partnerships ( 1 , 0 0 0 - 3 , 0 0 0 - 4 , 0 0 0 )

Prepare cash flow statement fronm the following before Working Capital Changes (13,000)
information of Mr. Thinumalai. Balance CL OperatingL o s s .

inventories (58,000-40,000) (18,000)

Increase
in
Balance Sheets in debtors
(40,000-30,000) (10,000)
Increase
creditors (60,000 42,000) 18,000
Liabilities in
1998 1999 Increase
Assets outstanding expenses
5,000
Rs. Rs. 1998 Increase in
Rs. 1999 (13,000-8,000)
Capital 80,000 41,000 Land &
Loan from SFC Buildings
30,000 Plant& Machinery 70,000 L (18,000)
from operating activities
35,000 Net Cash
Bank overdraft 60,000 96,000 Inventories Investing activities:

40,000 I Cash Flowsfrom

Creditors 42000 60,000 Debtors Sale ofMachine 4,000
30,000 Purchase ofLand & Buildings (30,000)
Outstanding exp. 8,000 13,000 Cash
15,000 (1,00,000-70,000)
1,90,000 240,000 investing açtivities (26,000)
Additional data:
1,90,000 2400 Net Cash used in
activities:
II Cash Flows from Financing
(1) During the year 1999, Mr. Thirumalai sold a machine Loan from SFC 30,000
Rs. 11,000 (accumulated costng
depreciation thereon Rs. 3,000) for Rs. 4,00. The Drawings (W.N.2) (15,000)
accumulated depreciation on plant and machinery was Rs. 8,000a
31-12-98 and Rs. 12,000 on 31-12-99. Net Cash from Financing activities 15,000
(2) Profit and Loss Account showed a net loss of Rs. 24,000 for the year 19
Net Decrease in Cash and Cash Equivalents (29,000)
Add: Cash (45,000)
and Cash
Equivalents at the beginning(15,000-60,000)
of the year

Cash and Cash

Equivalents at the end of the year (22,000-96,000) (74,000)
la li
 Per AS S)
WN.I
Machinery Account
hagement AccounHn. Elow
Statement
(As Per
II (As
ll Balance Sheets
Cash

1986 Assets 1985 1986

Particuiars Rs. 1985
Rs. Rs.
To Balance b/d 80.000 By Cash
Particulars Liabilties Rs. Rs.
20,000 20,000 Goodwill 2,400 2,400
(Sale)
By P&L Ae Equitys h a r ec a p i t a l

2,800 3,600 Land 8,000 7,200

(Loss on
Sale
(10.000-3,000-5.000) 7,400 7,200
G e n e r a lr e s e r v e

2000
3,200 2,600 Building
A/c
By 2,000 2,200
Depreciation
Loss
and 1,600 1,080 Investments
(Bal. Fig Profit
By Balance cld 6,000 4,680
S u n d r yc r e d i t o r s

240 160 Inventories

O u t s t a n d i n g e x p e n s e s

3,200 3,600 A/cs receivable 4,000 4,440

80.000 Provisionfor tax

debts| 80 120 Bank balance 1,320 3,040

for bad
.N.2 80,000 Provision
31,120 31,160 31,120 31,160
Computation of Drawings
additional information has been supplied
Rs. Following
has also been sold for Rs. 800
Opening Capital 1.25.000 A piece ofland
Rs. 1,400 has been charged on building.
Add: Net Profit 45.000 G Depreciation amounting to
for taxation has been made for Rs. 3,800 during the year.
cn Provision
1,70,000 IMadras, Ist M.Com(CA2A) Ap. 2010; B.Com, Sep. 19881
Less Closing Capital 1,53,000 Solution
Cash Flow Statement of Malar Ltd for the year ended 31-12-1986
Drawings 17,000 Particulars Rs Rs.
Note: In the case of sole Traders and
partnershiip fîrms, Net profit is added to the Cash flows from Operating Activities:
Capital Accounts. So, we can ascertain either Drawings or Net Net Profit before tax and extraordinary items (W.N.2) 4,000
item by profit as missing
using the following formula Adjustments For:
Opening Capital + Net Profit
Drawings Closing Capital.
-
=
Depreciation on building I,400
3(B) Comprehensive Cash Flow Statements-With or
Without Sale of Fixed Ases
Ilustration 13 Operating profit before working capital changes 5.400
Malar Lid. Furnish Decrease in inventories
3ist Dec. 1985-86. You
you the following Balance Sheets for the years en
Increase in provision for doubtful &cbts
(6,000-4,680) 1.320

ended 31-12-1986.
are required to preparea cash flow statement tor e year (120-80) 40
Decrease in creditors
(1,600- 1,080) (520)
Increase in accounts
receivables (4,440-4,000) (440)
Decrease in
Cash
outstanding expenses (240- 160) (80)
generated from operations 5.720
Tax paid (W.N.1)
Net cash
from
(3.400)
operating activities 2,320
 ,113
I Cashflows from investing activities
Sale of Land (8,000 - 7,200)
Managementent AcCOust
AccOnntmg nt I1
l o wS t a t e m e n t ,
(As Per AS 3)

Cash Building Account

Building purchased (W.N.3) 800 HNS
Purchase of Investments (2,200 -2,000) Rs Particulars Rs.
(1200) Particulars 1,400
Net Cash used in invésting activities
(200) 7,400 By depreciation
7,200
To
Balancehbd 1,200 By Balance c/d
III Cash fAows from Financing activities (Bal. Fig.)
Fip
(Purchase)

8,600
600) p
Bank
8,600
Net increase in cash and cash equivalents
Add Cash and Cash equivalents at the
beginning of
of the year. 720 ilustration1 4
Balance Sheets
ets of Ponni Ltd., make out the statement
following
the
From

Cash and Cash equivalents at the end of the year ,320 C a s hf l o w .

Balance Sheets

989 1990
WN.I 3,040 1989 1990 Assets
Rs. Rs. Rs
Rs
Liabilities

Provision for Tax Account 90,000

4,00,000 Goodwill 1,15,000
|3,00,0
Particulars chare capital 1,70,000
Rs. Particulars & Buildings 2,00,000
Eguity
pref.| 50,000 1.00,000 Land
To Bank (Tax paid) (Bal. Fig.) 3,400 Rs Redeemable
Plant 80,000 2,00,000
By Balance b/d
To Balance cid 3,200
share capital
70,000 Debtors 1.60,000 2,00.000
3,600 By P&L Ac (Provision 40,000
made) 3,300
General reserve

30,000 48,000 Stock 77,000 1,09,000

P&L A/C
7,000 42,000 50,000 Bills receivable 20,000 30,000
Proposed dividend
7,000 15,000 10,000
55,000 83,000 Cash in hand
WN.2 Creditors
8,000
Cash at bank 10,000
Computation of Net Profit before Tax and Bills payable
20,000 16,000
Extraordinary items Provision for taxation 40,000 50,000
Particulars
Rs
6,77.000 8.17,000 6,77.000 8.17,000
Closing P&L A/c Balance
2,600 Additional Information
Less: Opening P&L A/c Balance 3,200
(a) Depreciation of Rs. 10,000 and 20,000 have been charged on plant
Rs.
account and land and buildings account respectively in l1990.
600 1990.
Add: Transfer to general Rserve (b) An interim dividend of Rs. 20,000 has been paid in
1990.
() Income tax Rs. 35,000 was paid during the vear
(3,600 -2,800) 800
B.B.A. (etc) April 2007;
Madras, B.Com1CE) Oct. 2009; B.Com,
B.Com, April 2006; B.Com, (ICE)
May 2001
200
Add: Provision for tax 3,800

Net Profit before Tax 4,000

 5.113
5.114 II (As
Per AS 3)

Management Accou
Statement

w
Solution Cash
Flo
Cash flow Statement of Ponni Ltd. for
Rs
tha

Particulars
ycar 1990 Balance
48,000
A/C
P&L

Jc
A/C 30,000
I Cash flowsfrom operating activities: Rs. Closing
B a l a n c e
o fP&L

Opening
Net Profit before tax and extraordinary
18,000
items (W.N. 1)
Less

30,000
Aajustments for 1,63,000 Transfer to Gen.
ieneral Reserve

Depreciation on Plant
Depreciation on Building 10,000
A d d :

Transn040,000)
(70,000-40,000)

50,000
Add: P r o p o s e dd i v i d e n d

Goodwill writtenoff (1,15,000 -

90,000) 20,000 Ad: Interinm d i v i d e n d

20,000
25,000 A/c below) 45,000
Operating profit before working capital changes Provisionfor Tax (See
Increase in creditors (83,000-55,000) 2,18,000 Add:
and Extraordinary
items 1,63,000
before Tax
Decrease in billspayable (20,000- 16,000) 28,000 Net Profit
Increase in Debtors (2.00,000- 1,60,000) (4.000) Provision for Tax Account
Increase in Stock (1,09,000-77,000) (40,000)
Increase in Bills reczivable (30.000
-20,000) (32,000) Particulars
Rs. Particulars Rs.
(10,000) 35,000 By Balance b/d 40,000
Cash generated from operations To Bank
(Tax paid)
50,000 By P&L A/c (Provision
Income Tax paid 1.60,000 ToBalance c/d

35,000 ade) (Bal. fig) 45,000

Net Cash FromOperating Activities
II Cash flows from investing activities 85,000 85,000
1,25,000
Purchase of Plant (W.N.2)
Sale of Building (W.N.3) (1,30,000) HN.2
10,000 Plant Account
Net cash used in
investing activities Particulars Rs. Particulars s
III Cash flows
from Financing activities (1,20,00)
Proceeds from issue of share
To Balance bld 80,000 By Depreciation 10,000
capital 1,00,000 To Bank (purchase) (Bal. fig.)
(4.00.000-3,00,000) 1,30,000 By Balance c/d 2,00,000
Redemption of preference share capital (50,000) 2,10,000| 2,10,000
(1,50,000-1,00,000) W.N. 3
Payment of Dividend (42,000 + 20,000) Land &
(62,00) Buildings Account
Net Cash used in
financing activities (12,00) Particulars Rs Particulars Rs.
To Balance b/ld
Net Decrease in Cash and Cash 2,00,000 By Depreciation
Add: Cash and Cash equivalents (7,00) 20,000
cquivalents the beginning
at 25.000 By Bank (sale Bal. fig.) 10,000
(15.000+ 10,000) ByBalance c/d 1,70,000
Cash and Cash
cquivalents at the end 2,00,000 2,00.000
(10,000+ 8,000) 1800
5.116
lustration 15

Thesummarised Balance Sheets f Kandan Ltd., a

Management Acc0uN Cash
Flows
Statement
Statement
II (As Per AS 3)
(1,68,000- 1,34.000)
(
34.000)
5.117

l-12-91 and'-ID4
C r e d i t o r s

Dccreasc in
are as follows: (4.55,000-2,10,000) (2.45.000)
I n c r e a s ei n d e b t o r s

Liabilitie5 991 1992

Rs. Rs
Assets 1.50,500
1991 C a s h o u t f l
ow from operations
o

Rs. (74.000)
Share capital 450,000 4,50,000 Fixed assets 1992 tax paid
(W.N.2)

General reserve
3.00,0003,10,000 Investment Rs Income

activities (2.24,500)
P&LA/c 56,000 68,000 Stock SO,000 Net
Cash
used in
operating

Creditors 1,68,000 1.34,000 Debtors 240 000 210 from m

investing
activities :

Tax provision 75,000 10,000 Bank 210,000 45S30 M

Cash
flows
Investments Purchased (W.N.4) (18.000)

Mortgage loan 2,70,000 149000 197 S a l e o fI n v e s t m e n t s

8.500
12.000
1049,000 12,42,000 Sale of
Fixed a s s e t s

Addtional Details 1049,000 124200 from investing

activities 2.500
(1) Investments costing Rs. 8,000 were sold for Rs. 8 S0o Net cash
financing activities
(2) Tax provision made during the year was Rs. l Cashflowsfrom
9,000 Mortgage loan taken 2.70,000
(3) During the year part of the fixed assets
costing Rs. 10,000 was e
Rs. 12,000 and the profit was included in P
You arersold for
& L Account. in Cash and Cash equivalents 48,000
Net Increase
to cash flow statement
prepare for 1992. quired Cash equivalents at the beginning ofthe yeari 1.49.000
d: Cash and
IMadras, B.Com.(CS) (SY64) April 2007;
Solution M.Com., April 19 Cash and cash equivalents
at the end of the year 1.97.000

Cash Flow Statement of Kandan Ltd. for the

year ending 31-12-1992 W.N.T
Particulars Rs.
Rs.
ICash flows from operating activities: Closing Balance of P&L AVc 68,000
Net Profit before tax and Less: Opening Balance of P&L A/c
extraordinary items (W.N.1) 31,000 56,000
Adjustments For:
Depreciation (W.N.3) 12,000
70,000 Add: Transfer to General Reserve
Profit on 10.000
Sale of Investments (8,500-8,000) (500)
Profit on Sale of Fixed assets (12,000- 10,000) (3.10,000-3,00,000)
(2,000) Add: Provision made for
tax 9.000
Operating Profit before Working Capital changes 98,500 Net Profit before Tax
31.000
Decrease in Stock
(2,40,000-2,10,000) 30,000
 5.118 Management Accom
W.N.2
Provision for Tax Arcount

Particulars Rs
Particulars
To Bank ( Tax paid) (Bal Fig) 74,000 By Balance b/d Rs
To Balance ed 10.000 By P'&l. AMc
(Provision made)

84,000|
84 W
WN.3
Fixed Assets Account

Particulars Rs Particulars
To Balance b/d 4.00,000 By Bank (sale) Rs
To P&LA/c(profit on sale) By Depreciation (Bal. fig.) 12,000
(12.000- 10.000) 2.000 By Balance c/d 70.000
4,02,000
3.,20.00
HN.4 4,02,000 Solutie

nvestments Account

Particulars Rs Particulars
Rs
To Balance b/d 50.000 By Bank (sale)
To P &L Alc (profit on sale) 8,500 Cas
By Balance c/d
(8.500-8.000) 500
60.000
To Bank (purchase - Bal. fig) 18,000 Adju

68,500
Fllustration 16 68,500
The following shows the balances in condensed form of Pavitra Ltd. at the
beginning as well as at the end of the year 1987:
Liabilitres Opera
I-1-87 31-12-87 Assets
& Capital Rs Rs 1-1-87 |3/-12-87 Da
Rs Rs.
Creditors 52,000 Inc
47,500 Cash& Bank balances
Outstanding exp. 6,000
45,000 45,000
6.500 Debtors 38,500 26,500 Inc
8% Debentures 45.000 35.000 Investments 50,000 32,000 Inc

De

Net Cas
 Statement
II (As Per AS 3) 5.119
Flow

oh
p e p r e c i a t i o nf u n d
20,000 22,000 Prepaid expenses 500 1,000
Stock-in-trade 41,000 53,000
eservefor
30,000 30,000 | Land & Buildings 77,000
ontingencies 77,000
8,000 11,500 Machinery 24,000 33,000
1,15,000 1,15,000
p e L A c

Y h a r ec a p i t a /

2,76,000 2,67,500 2,76,000 |2,67,500

information is also available
The following
dividend was paid in cash.
(a) 10%
Machinery for Rs. 15,000 was purchased but old machinery costing
) New on which accumulated depreciation was
Rs 6.000 was sold for Rs. 2,000
Rs. 3,000.
cl Rs. 10,000 8% debentures were
redeemed by purchase from open market at
Rs.96 for a debenture of Rs.
100.

Investments were sold at book

value.
d)
Flow Statement.
Prepare a Cash
[Madras, Ist M.Com., April 2005 M.Com., April 1988/
olution:
Ltd. for the year ended 31-3-1987
Cash Flow Statement of Pavithra
Rs. Rs.
Particular

Cashflows from operating activities:

items (W.N.1) 15,000
Net Profit before tax and extraordinary
Adjustments For: 5,000
Depreciation (W.N.2)
1,000
Loss on Sale of Machinery (W.N.3)
Profit on redemption of Debentures (W.N.4) (400)

20,600
Uperating Profit before Working Capital changes 12,000

Decrease in debtors (38,500-26,500) 500

(6,500-6,000)
crease in outstanding expenses
(500)
500)
Crease in prepaid expenses (1,000-
(12,000)

Increasein Stock (53,000-41,000) (4,300)

-47,500)
Decrease in Creditors (52,000 16.100

Net Cash from operating activ

5.120 allagen
gement ACCunting Depreciation Fund Alc
Activities
II Cushflowsfrom Investing Particulars Rs.
Rs.
Sale of Machinery 2,000 Particulars

3,000 By Balance b/d 20.000

Sale of Investments 18,000 p M a c h i n e r yA l c
By Depreciation (current
Aceumulated Depreciation on
Machinery Purchased (15,000) year's depreciation)
(Accu
machinerysold) 5.000
Net Cash fromInvesting Activities 22,000 (Bal. fig)
5,000 öBalancec / d
l l Cash flows from Financing Acivities 25,000
25.000
Redemption of debentures
(45,000-35,000)-400 (9,600) HN3 Machinery Account
Payment of Dividends (1,15,000 x 10%) (11,500) Rs.
Rs. Particulars
Particulars
Net Cash used in financing activities 2.000
(21,100) o Balance b/d
24,000 By Bank (sale) 3.000
fund Ve
15.000 By Depreciation
Net flow of Cash and Cash equivalents To Bank (purchase)
Depreciation on mac' ine sold)
Add: Cash and Cash equivalents at the (loss on sale)
ByP&LA/c
beginning of the year 1.000
45,000 (Bal. fig.)
33.000
By Balance c/d
Cash and Cash cquivalents at the end of the year 45.000
39.000
39,000
WNI
Rs. W.N.4
8% Debentures A/c
Closing P&L A/c Balance 11.500 Rs
Particulars
Less: Opening P&L A/c Balance 8,000 Rs.
Particulars 45.000
Balance b/d
ToBank (Open Market Purchase)| 9.600 By
3.500
10 10000x6
Add: Dividendpaid 1.15.00 100 11.500 100
TP&L Alc (Profit) 400
Net Profit before Tax and
Extraordinary items 15,000 (10,000-9,600)
To Balance c/d 35,000 45,000

45,000
 5.123
S.122
Issue
Management Accounting +Flow
Statement II (As Per AS 3)

Comprehensive Cash Flow Statements- shares for non cash fncrease in Stock
(Excluding Stock bought (10,000)
assets issue of shares)
Illustration 17 by
Prepare Cash Fliow Statement of Suryan Ltd. from the following : (80,000-50,000 20,000)
Balance Shects debtors
ncrease in Debtors (Exciuding

Liabilities 1997 1998 Assets 1997 acquired by issue of shares)

Rs. Rs. 1998 (1,00,000-30,000 30,000) (40,000)
Rs. Rs.
Share capital i.00.000 400,000 Goodwill
20,000 Cash outflow from operations
1,15,000
8% Debentures 2.00.000 Machinery 125,000 4,75.000 (25,000)
Retained earnings 60.000 90.000 Stock 20,000 IncomeTax paid (W.N.2)
Creditors
80,000
40,000 1.00,000 Debtors 90,000
30,000 1,00,000 Net Cash from operating activities
Bills payable 20,000 40,000 Cash at bank S0,000 1,50,000
Provision for tax 30,000 40,000 Cash in hand
I Cash flows from investing activities:
25,000 45,000 (2,80,000)
Machinery Purchased for Cash (W.N.3)
250,000 8.70.000 (2,80,000)
Additional Information: 2,50,0008,70,000
WCash flows from Financing activities:
(a) During 1998, the business of 1,00,000
sole trader was purchased by issuing
a Cash Proceeds from issue of shares (WN.4)
shares for Rs. 2,00,000. The assets
acquired from him were: Goodwill Rs.
20,000, Machinery Rs. 1,00,000, Stock Cash Proceeds from issue of debentures (WN.5) 2,10,000
Rs. 50,000 and Debtors Rs. 30,000.
(b) Provision for tax 3.10,000
charged in 1998 was Rs. 35,000. Net Cash flows from Financing activities
c) The debentures were issued
at a premium of 5% he
retained eamings. which is included 1,20,000
Net ncrease in Cash and Cash and Cash
(d) Depreciation equivalents 75,000
charged on machinery was Rs. 30,000. d
Cash and Cash equivalents atthe beginning
Solution TAndhra, B.Com. Adapted of the year

Cash Flows 1,95.000

Statement of Suryan Ltd., for the 8 ash and Cash equivalents at the end of the year
year 19
Particulars Rs.
I Cash flows from Rs. WAN.A
operating activities Rs
Profit before tax and
extraordinary items (W.N.1) 55,000 Closing retained earning 90.000
Adjustments For 60,000
Depreciation on Machinery Opening retained earnings
30,000 30,000
Operating Profit before Working AddProvision made for Tax 35,000

Increase in Capital changes 85,000

Creditors (1,00,000-40,000)
Increase in Bills 60,000 65.000

Payable
(40,000-20,000) 20,000 Less 10,000
Premium on issue of Debenture:
(2,00,000x 5%)
55.000
Net Proft before TTax and
ore
Extraordinary
items
5.124 II (As per AS 3
H.N. 2
Management Accounting FlowStatement
5.125
DComprehensive
Cash Flow tatements-lnvolving Bank overdraft
Provision for tax A/c
18(Opening Balance and ciosing overdraft)
Particulars Rs. stration
Particulars you to prepare cash flow statement for 1999 and
To Bank Tax paid, Bal. fig) 25,000 By Balance b/d Rs VisaliLtd. requests explain
for the huge amount of over draft inspite of profitable operations of
To Balance cd
40,000 By P&LA/c 30,000 e causes
(Provision made) You are provided with the following Balance Sheets and the
35,000 company.

65.000| Hitional data given thereafter:

H.N. 3 65,000 Balance Sheets
Machinery Account
Liabilities 1998 1999 Assets 1998 1999
Particulars Rs.
Particulars
To Balance bld Rs. Rs. Rs. Rs Rs
To Vendors Ac
1.25.000 By Depreciation 30,000 2,00,000 2,00,000 Land
(Business purchase) 1.00.000 By Balance c/d Sare capital I,55,000 2,16,000
To Bank (cash purchase. Bal. fig.) 2.80,000
4,75,000
Debentures 1,00,000 20,000 Buildings 2,00.000 2.60.000
Bank Loan 80,000 1,40,000 Machinery 60,000 3,00,000
WN. 4 5.05.000 5,05,000 Bank overdraft 2,60,000 Stock 0,000 120.000
Share capital A/c AGServes
Particulars
80,000 1,40,000 Debtors 60,000 80,000
Rs.
Particulars Rs.
Ontent Liabilities 60,000 90,000 Cash at bank 30.000

By Balance b/d hiposed Dividend 10,000

1,00.000
1,00,000 1,40,000 Cash in hand 5,000
By Vendors A/c
Discount on issue
To Balance cid Business purchase) 2.00.000
of debentures 20,000 4,000
4.00,000 By Bank (issue for cash, Bal. 00
fig
WN.S 4.00,000 4.00.000 620,000 9,90.000
6,20,000 9,90,000
a
Face Vakue of Rs. During 1999, dividend paid Rs. 1,00,000
Debentures was
Add: Premium on issue at 5%
issued 2,00,000 )Debentures were redeemed
10,000 Deprecciation
.20% premium
at
buildings and
Proceeds from issue of Rs. charged during 1999 was Rs. 40,000 on

Debentures 2,10,000
20,000 on machinery.
Karnutuka. B.Con.. adapted!
5.126 Nent Acounting F l o w
3,IZ/

Solution
ot Visain Ltd for the year
Cash Flow Statement Rs.
1999 Reserves
Balance
of 1.40.000
Particulars Closing
Rs Balance of
Reserves
80,000
activities
I Cashflowsfrom operating
Opening

Rs.
Nct Profit before tax and extraordinary items (W.N. n
2,00,000 60,000
Adjustments For Dividend proposed during the year 1.40,000
Depreciation on Building
40,000 Tax and extraordinary items
Depreciation on Machinery
before
2.00,000
20,000 NetProfit
Premium on redemption of debentures
16,000
(1,00,000-20,000)x 20% Buildings Account
Discount on issue of debentures written off
Particulars Rs. Particulars
(20,000-4,000) Rs
16,000 oBalance b/d 2,00.000 |By Depreciation 40,000
Operating proft before working Capital Bank (purchase, Bal. fig) 1,00,000 By Balance cid
Increase in curent
changes 2,92,000 2,60,000
liabilities (90.000-60,000) 3.00,000
Increase in Stock 30,000 3,00,000
(1,20,000-90,000) WN. 3
Increase in Debtors
(80,000-60.000) (30,000)
Net Cash from (20,000) Machinery Account
operating activities
II Cash flowsfrom Investing Activities Particulars Rs. Particulars
2,72,000 Rs
Purchase of Land (2.16,000-1,55,000) bBalance b/d 60,000 By Depreciation 20.000
Purchase of Building (61,000) bBank (purchase, Bal.
Purchase of
(W.N.2) fig.) 2,60,000 By Balance cld 3,00,000
Machinery (W.N.3) | (1,00,000)
(2.60,000) 3,20,000 3.20.000
Net Cash used in
IIl Cash investing activities
flows from Financing (4,21.000) Rs
Redemption of debenturesActivities Face Value of Debentures in 1998 1,00,000
Proceeds of Bank (W.N4) Face Value of Debentures in 1999
Loan (1.40.000 (96.000) 20,000
Dividends paid 80,000) 60.000
(1,00,000)) Face Value of Debentures redeemed 80.000
Add:
Net Decrease
in Cash and
(1.36,000) Premium on redemption at 20% 16.000
Add. Cash Cash
equivalents atequivalents
and Cash Cash paid to
(2,85,000) redeem Debentures 96.000
the
of the ycar
beginning
35,000
Cash and
Cash
of the yea equivalents at the end (2.50.000)
(10,000
2.60,000)
 F l o wS t a t e l

5.128 Management Accounting

O.D.
in
debtors
(1,50,000- 1,40,000) (10,000)
& Cash) (10,000)
lustration 19(Opening O.D. Cash-Closing
& increas

investments
Trade
in
Statcement from the following: Increase
Prepare a Cash Flow (80,00070,000)

23Balance sheet as on 31-3-99 and 31-3-2000

activities 2,80,000
Liabilities 31-3-99 31-3-2000 Assets
31-3-99 131-3-2000 NetCash
from operating

Rs Rs Rs. investing
activities:
Rs
Cashlowsfrom
Share capital 1,00,0001.s0,000 Goodwill 60,000 5,000
20,000 SaleofFixed assets
5% Debentures 40,000 70,000 Fixed Assets1,10,000 3,40,000 assets (W.N.2) (2,50.000))
60,000 8S.000 Stock Purchaseof Fixed
Retained earnings
2,20,000 1,00.000
Bank overdraft 70,000 90,000 Debtors 1,40,000 11,50,000 activities (2.45,000)
Net Cash used in investing
Mortgage loan 1,20,000 40,000 Tade inestmets 70,000 80,000 activities
Current liabilities L,60,000 1.90,000 Cash in hand 10,000 Cah flowsfrom Financing
15,000 60,000
Provisioa for Proceeds from issue of shares (W.N.4)
depreciation Proceeds from issue of debentures
on fixed asses 30,000
60,000 80,000 (70,000- 40,000)
Payment of dividends (60.000)
6,10,000 7,05,000 6,10,000 7,05,000
During the year ending 3 1-3-2000, Repayment of Mortgage Lo0an
(a) Dividend paid to shareholders was Rs. (80,000)
60.000 (1,20,000-40,000)
(b) Fixed assets costing Rs. 20,000 were sold Net Cash used in Financing activities (50.000)
for Rs. 5,000 thereby causinga
loss of Rs. 7,000 on their sale.
C Shares were issued at 20%
(15.000)
premium which is included in the retained eamings. Net Decrease in Cash and Cash equivalents
Solution: d: Cash
and Cash equivalents at the beginning (10.000
70.000) 60.000)
Cash Flow of the year
Statement for the year ending 31-3-2000
Particulars Rs Cash and Cash (15,000
75.00C
I Cash fiowsfrom Rs equivalents at the
- 90.000)
operating activities: end of the
year
Net Profit beiore tax
and
extraordinary items (W.N.1) 75,000
Adjustmets For Trade investments are not taken as Cash Equivalents
Depreciation (WN.3)
28,000
Goodwill written off (60,000-20.00o)
Los on Sale of Fixed 40,000
Assets (WN.2) 7,000
Operating Profit before
working capital changes 1.50.000
Increasein current liab1lities
Decrease in (1,90.000-
Stock (2.20.000 1,00.000) 160.000)
-
30,00
20 (H
 Ii AS
(

Management Accountino
S t a l e n n e n t

S.130
Flow
( o n p r e h e u s i v eC a s h
ensjve Cash Flow statementss-Direct& Indirect Methods
HN. tsralnon
20
Rs. sheets and Income statement of
are the Balance Sreyas Ltd.
ClosingRetainedcarnings 85,000 ollowing
Less Opening retained carnings 60,000 31-3-2003 |31-3-2004 31-3-2003 31-3-2004
Rs. R Assets Rs. Rs.
Liabulties

25,000
Add Dividend
1,80,000 2,22,000 Fixed Assets
60,000 k a cC a p i t a l

Poit& Loss Ac 75,900 81,900 Land 24,000 48,000

Less: Share premiuim included in retained
85,000
Creditors
1,20,000 1,17,000 Buildings 1,80,000 2,88,000
eanings standingexpenses 12,000 24000 Current Assets
10,000
Net Profit before Tax and Extra
hovisionfor Tax 6,000 6,600 Cash 30,000 36,000
ordinary itcms
75,000 Dpgreciation provision| Debtors 84,00093,000
W.N. 2 an Buildings 60,000 66,000 Stock 1,32,000 48,000
Fixed Assets Account Advances 3,900 4500
Particulars Rs
To Balance bld Particulars Rs. 4,53,900 5,17,500 4,53,900 5,17,500
ToBank (Purchase Bal. fig ) 1,10.000 By Provision for depreciation Alc| 8,000
2,50,000 (depreciation asset Cost of Building sold was
Rs. 36,000.
on
sold)
(20,000-5,000-7,000) Profit and Loss Account for the
year ended 31-3-2004.
By Bank (sale)
By P&L Alc (loss on sale)
5,000 Particulars Rs. Particulars Rs.
7,000 o Cost
of Sales
By Balance cld 3,40,000 To 9,90,000 By Net Sales 12,60.000
W.N. 3 Wages and Salaries
3,60.000| 3,60,000
b
Gross Profit c/d 1,20,000
Provision for
1,50,000
Particulars
Depreciation on Fixed Assets Account
12,60,000 12,60,000
To Fixed Rs. o Operating Expenses
assets AJc Particulars Rs.

(Depreciation on asset By Balance b/d 60,000 o Depreciation 40,000 By Gross Profit b/d I.50,000
20,000 5,000-7.000)sold) 8,000 By Depreciation o
NetProviProfit
sion forcldTax 30,000 By Profiton Sale ofBuilding 6,000
To Balance cld A/c
(Current year depreciation) 44,000
80,000 Bal. fig) 28,000
42,000
W.N.4
88000 88,000
1,56,000 1,56,000

Add:
Shares issued
during the year (i Rs
toposed dividend
Balance carried to 36.000 By Balance B/Fd 75,900
Premium at 20%
(50,000 20%).000 1,00,000)
x 50,000 Balance sheet By Net Profit b/d
42,000
Procecds from issue of 10,000 81,900
shares I1700
60,000 1,17,90
 Management Accountins
o wS t a t e n i

5132 a
Cash
Flow
Statement
Ising i r d i gN o t s

to prepare
required
You are
(A) Direct Method
Rs Rs
(B) Indirect Method
customers
from
Solutien eceipts
Cash 12,60,000
(A) Direct Miethod:
of Sreyas Ltd. the
for the
year ended
vear

Cash Flows Statement 31-3-2-2004 dd

Sales

O p e n i n gd e b t o r s
otors
84,000
Farticwiars Rs
activitics: Rs 13,44,000
operating
ICash fiowsfrom
from customers (W.N. I) 12,51,000 end 93.000
Cash receipts I S s D e b t o r
atthe
s

and Employees (WN.2) (10,57.600)

Cash paid 1o Suppliers customers 12,51,000
from
receipts
Cash
Cash generated from operations 1.93,400
income Tax paid (WN.3) (43.400) WN.2
Rs Rs
Net Cash from operating activities and Employees
1,50,000 Cash paid to suppliers
I Cash flows from Investing activities Cost of Sales 9,90,000
Purchase of Land (48,000-24.000) (24,000) Ad: Operating Expenses
40,000
Purchase of Building (WN 4) (1,44,000) Wages and salaries 1.20,000
Sale ofBuilding 18,000
11,50,000
(1,50,000)
II Cash Flow from Financing Activities: 1.20.000
Ad: Opening Creditors
lssue ofshares (2.22,000- 1,80,000) 42,000 48,000
Closing Stock
Dividend paid (36,000) 4,500
Closing Advances
12,000
Net Cash from Financing Activities Opening outstanding expenses
6,000 1,84,500

13.34,500
Net Increase in Cash and Cash equivalents 6,000
I,17,000
Add: Cash and Cash equivalents at the Less Closing Creditors
beginning of the year 30,000
.32,000
Opening Stock
Cash and Cash equivalents at the end of the year 36,000 3,900
Opening Advances
24,000
Closing outstanding expenses 2,76,900

10,57,600
Cash paid to Suppliers and Employees
 5.134
llagement ACCOunting Indireet Method

State
of Sreyes Ltd for the year ending on 31-3-2004
Flow
8N3 Cash
Provision for Tax Account Rs. Rs.
Particulars

Particulars
Rs. Particulars activities:
Rs. operating

To Bank (!ax paid)

43,400 By Balance b/d Cash lows from items 86,000
6,000 before Tax and Extraordinary
By P&L A/c (Provision mode) Net Profit
(Bal. Fig.
To Balance cd 6,600 44,000 (42,000+44,000)

Adjustmentsfor:
50,000 30,000
50,000 Depreciation
Profit on Sale of Building (6,000)
N.4
Buildings Alc (at cost)
I,10,000
Operating Profit before working Capital changes
Particulars Rs. Particulars Rs. Increase in debtors (9,000)
To Balance bld
1,80,000 By Depreciation Provision A/c 24,000 Decrease in Stock 84.000
Tp P&L AlC (Profit on Salc) 6,000
To Bank (Purchasc)
(Depreciationon Building sold)| Increase in Advances (600)
1,44,000 By Bank (Sale)
(Bal. Fig)
18,000 Decrease in Creditors (3,000)
By Balanc c/d 2,88,000 Increase in outstanding expenses 12,000

3,30,000 3,30,000 Cash generated fromoperations 1,93,400

Depreciation Provision on
Buildings A/c Income Tax paid (W.N.3) 43,400
Particulars
To Buildings AJc
Rs Particulars Rs Net Cash 1.50,000
from
operating activities
(Depreciation on Building sold) 24.000 By Balancc b/d 60.000
Cash flows from Investing activities
(Bal. Fig) By P&l. AVc (Current year's 30,000
Purchase of Land (48,000 -24,000)) (24,000)
To Balance cdd depreciation) Purchase of Building (1,44,000)
66,000 (W.N.4)
Sale of Building 18,000

90,000 90,000
Net Cash used in (1,50,000)
investing activities
Cashylows from Financing activities
1SSue of Shares (2.22,000 - 1,80,000) 42,000
Dividend paid (36,000)
Net Cash 6,000
from Financing activitcs
et 6,000
Add: Cashincreasei Cash and Cash Equivalents 30,000
a s h equivalents at the beginning ofthe year
Cash andC quivalents at the end of the year
36,000