Liabilities 31.03.20X1 31.03.20X Assets 31.03.20X 31.03.

20X2
Rs. 2 1 Rs.
Rs. Rs.
Equity Share Capital 30,000 35,000 Goodwill 10,500 8,000
General Reserve 10,000 15,000 Machinery 41,000 54,000
Profit and Loss A/c. - 7,000 10% Investments 3,000 8,000
10% Debentures 21,000 25,000 Stock 6,000 24,500
Creditors & Bills 17,500 21,500 Marketable 10,000 9,000
payables Securities
Bank Over draft - 4,000 Cash and Bank 8,000 4,000
Balance
78,500 1,07,500 78,500 1,07,500
COURSE : FAC SECTION : D DATE : 03/09/2019 QUIZ : 5

Additional Information:
Investments costing Rs.3,000 were sold for Rs.2,800 on 31.03.20x2. .
Depreciation charged on Machinery is Rs. 4,000
It has been assumed that new debentures have been issued and new Investments
have been purchased on 31.03.20x2.
Prepare Cash flow statement for the year ending on 31.03.20X2
Ans: Cash Flow Statement for the year ended 31st December, 20X2

Particulars Rs. Rs.

I. Cash Flows from Operation Activities:
Closing Balance as per Profit & Loss A/c. 7,000
Add: Opening Balance as per Profit & Loss A/c. 0
Add: Transfer to general reserve 5,000

Add: Depreciation 4000

2500
Goodwill written off 200
2100
Loss on sale of Investments

Interest on Debentures
Less: Interest on Investments (300) 13,500
Operating Profit before Working Capital Changes 20,500
Add: Increase in Creditors for goods 4,000
Less: Increase in stock (18,500)
Net Cash from Operating Activities 6,000
II Cash Flows from Investing Activities:
Purchase of Machinery (17,000)
Purchase of Investments (8,000)
Proceeds from Sale of Investments 2,800
Interest on Investments 300

Net Cash used in investing Activities (21,900)

III Cash Flows from Financing Activities:
Proceeds from Issue of Equity Share Capital 5,000
Proceeds from Issue of Debentures 4,000
Interest on Debentures (2,100)
Net Cash from Financing Activities 6,900
IV Net Increase in Cash and Cash Equivalents ( I + II + III) -9,000
(6000-21,900+6900)
V Cash and Cash Equivalents at Beginning of Period
Cash and Bank Balance & Marketable Securities 18,000
8000+10000
VI Cash and Cash Equivalents at end of Period ( IV + V)
Cash and Bank Balance & Marketable Securities 9,000
4000+9000-4000
Comment: She should continue this business as she had earned cash from Operating activity & invested
in Machinery & Investment, also received cash by financing activities-Issue of shares & Debentures.

(1)

Dr. Machinery A/c Cr.

To Balance b/d 41,000 By Depreciation 4,000
To Purchases* 17,000 By Balance c/d 54,000
58,000 58,000

Dr. Investments A/c Cr.

To Balance b/d 3,000 By Cash 2,800
To Purchases* 8,000 By Loss on sale of Investment 200
By Balance c/d 8,000
11,000 11,000