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Cash Flow Statement Problem

The document provides summarized balance sheets for Growell Ltd. as of March 31, 1998 and 1999 along with additional financial information for the year ended March 31, 1999. Using this information, the solution prepares various ledger accounts and an adjusted profit and loss statement. It then provides a cash flow statement using the indirect method that shows net cash from operating activities was Rs. 107,300, net cash used in investing activities was Rs. 6,200, and net cash used in financing activities was Rs. 93,000 resulting in a net increase in cash and cash equivalents of Rs. 8,100.

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3K views

Cash Flow Statement Problem

The document provides summarized balance sheets for Growell Ltd. as of March 31, 1998 and 1999 along with additional financial information for the year ended March 31, 1999. Using this information, the solution prepares various ledger accounts and an adjusted profit and loss statement. It then provides a cash flow statement using the indirect method that shows net cash from operating activities was Rs. 107,300, net cash used in investing activities was Rs. 6,200, and net cash used in financing activities was Rs. 93,000 resulting in a net increase in cash and cash equivalents of Rs. 8,100.

Uploaded by

api-3842194
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PDF, TXT or read online on Scribd
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Question:

Following are the summarized balance sheets of Growell Ltd., as on 31st March, 1998 and 1999.
1998 1999 1998 1999
Share Capital 200,000 250,000 Land & Building 200,000 190,000
General reserve 50,000 60,000 Machinery 150,000 169,000
P L A/c 30,500 30,600 Stock 100,000 74,000
Bank Loan 70,000 - Debtors 80,000 64,200
Creditors 150,000 135,200 Cash 500 800
Provision for Taxation 30,000 35,000 Bank - 7,800
Goodwill - 5,000
530,500 510,800 530,500 510,800

Additional Information:
During the year ended 31st March, 2004
(i) Dividend of Rs. 23,000 was paid.
(ii) Assets of another company were purchased for a consideration of Rs. 50,000 payable in shares.
The following assets were purchased:
Stock: Rs. 20,000; Machinery Rs. 25,000
(iii) Machinery was further purchased for Rs. 8,000
(iv) Depreciation written off on machinery Rs. 12,000; and
(v) Income-tax provided during the year Rs. 33,000;
(vi) loss on sale of machinery Rs. 200 was written off to general reserve.
You are required to prepare the Statement of Cash flow.

Solution:

Share Capital Account


By Balance b/d 200,000
By Machinery 25,000
By Stock 20,000
To Balance c/d 250,000 By Goodwill 5,000
250,000 250,000

General Reserve Account


To Machinery 200 By Balance b/d 50,000
To Balance c/d 60,000 By P L A/c 10,200
60,200 60,200

Provision for Taxation


To Bank A/c 28,000 By Balance b/d 30,000
To Balance c/d 35,000 By P L A/c 33,000
63,000 63,000

Machinery
To Balance b/d 150,000 By Depreciation 12,000
To Share Capital 25,000 By General Res. 200
To Bank 8,000 By Bank 1,800
By Balance c/d 169,000
183,000 183,000

Adjusted Profit & Loss Account


To Proposed Dividend 23,000 By Balance b/d 30,500
To General res. 10,200 By Operationg Profit
To Depreciation 22,000 before working capital
To provision for Tax 33,000 changes 88,300
To Balance c/d 30,600
118,800 118,800

Note: Depreciation on Land & Building


Opening Balance 200,000
Less: Closing balance 190,000
10,000

Growell Ltd.
Cash Flow Statement ( As per AS 3: Indirect Method)
for the year ended 31st March, 1999.
Particulars Rs. Rs.

Cash flow from Operating Activities:


Operating profit before working capital changes. 88,300
Add: Decrease in Stock [100000-(74000-20000)] 46,000
Add: Decrease in Debtors 15,800
Less: Decrease in Creditors - 14,800
Cash generated from operations 135,300
Less: Income taxes PAID 28,000
Net cash from operating activities 107,300

Cash flows from investing activities:


Purchase of Machinery - 8,000
Proceeds from Sale of Machinery 1,800 - 6,200
Net cash from investing activities

Cash flows from financing activities


Dividends paid - 23,000
Repayment of Bank Loan - 70,000
Net cash used in financing activities - 93,000

Net increase in cash and cash equivalents 8,100


Add: Cash and cash equivalents at beginning of period 500
Cash and cash equivalents at end of period (800 + 7800) 8,600

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