S11

Cr.
Adjusted Profit & Loss A/c
Rs.
Rs.
To Provision for Dep. on 15,000
To Prelimary Exp. written Plant 15,000 By Balance b/d
By Profit on sale of Land 3,000
To Loss on sale of off 8,000
69,500
Plant 5,000 By Trading Profit or Fund
To Provision for Tax
5,500 from operations
To Interim Dividend
50,000
To Balance c/d 4.000
87,500 87.500

Dr. Premium on Redemption of Pref. Shares A/c Cr.

Rs. Rs.
To Bank 10.000
10,000 By Share Premium Alc
10.000 10.000

Balance Sheet of A. Co. Ltd.

as at 31 December, 1999
Liabilities Rs. Assets Rs.
Equity Share Capital 5,00,000 Land at cost 2,05,000
Reserves and Surplus : Plant & Machinery at Cost 2,30,000
Share Premium 10,000 55,000
Investment
Profit & Loss A/c balance 4,000 Stock 30,000
Provision for Depreciation on Plant 25,000 Debtors 53,500
Sundry Creditors 30,500 Preliminary Expenses 1,500
PYovision for Taxation 5,500 (9,500 - 8,000)
5.75,000 5.75.000

II. CASH FLOW STATEMENT (ON PROFIT BASIS)

`02A4 22. From the following Balance Sheets of Symphony Ltd. and additional information prepare
a Cash Flow Statement for the year ended 31 December, 1999:
Balance Sheets

Liabilities 1998 1999 Assets 1998 1999

Rs. Rs. Rs. Rs.
Share Capital (Equity) 3,00,000 4,50,000 Fixed Assets (Net) 4,00,000 5,80,000
Redeemable Preference
Share Capital 1,00,000 50,000 Investments 60,000 40,000
Reserves and Surplus 35,000 50,000 Stock 65,000 2,75,000
Profit & Loss A/c 1,15,000 2,50,000 Debiors 2,40,000 1,60,000
Long-term Loan 1,25,000 Bilis Receivable 45,000 35,000
Sundry Creditors 1,25,000 1,75,000 Bank 47,500 60,000
Other Current Liabilities 20,000 75,000 Prepaid Expenses 12,500 6,000
Proposed Dividend 30,000 45,000 Miscellaneous
Provision for Taxation 49,000 75,000 Expenditure 20,000 14.000
8,90.000 1.70,000 8,90.000 11,70,000
512
Additional Information :
on fixed assets amounted to Rs. 1,40,000 and
(a) On3 IDecember, 1998 accumulated depreciation
on 31 December 1999, Rs. 1,65,000.
depreciation thereon being Rs. Z0,000 was discarded
(0) A Plant costing Rs. 50,000, accumulated
and written off.
an accumulated depreciation of KS. 6,000
was sold
(C) An old furniture costing Rs. 10,000 with
for Rs. 6,000.
(d) Investment costing Rs. 20,000 was sold for Rs. 14,000.
(e) Tax paid during the year 1999 was Rs. 35,000.
Working Notes :
Fixed Assets A/c
Cr.
Dr.
Rs.
Rs.
on
To Balance b/d 5,40,000 By Provision for Depreciation
(4,00,000 + 1,40,000) Fixed ASsets A/c (Dep. on
plant discarded) 20,000
30,000
To Profit & Loss A/c 2,000 By Profit & Loss A/c (Plant
(Profit on sale of furniture) written off)
By Provision for Depreciation 6,000
[6000 - (10,000 - 6000)] on Fixed Assets A/c (Dep. on
To Bank (Purchase 2,65,000
balancing figure) furniture sold)
By Bank 6,000
By Balance c/d (5,80,000 + 1,65,000) 7.45.000
8.07.000 8.07.000

Dr. Provision for Depreciation on Fixed Assets A/c Cr.

Rs. Rs.:
To Fixed Assets A/c (Dep. on 20,000 By Balance b/d 1,40,000
plant discarded) By Profit & Loss Alc 51,000
To Fixed Assets Alc. (Dep. on 6,000 (Depreciation provided
furniture sold) balancing figure)
To Balance c/d L65.000
1.91,000 1.91,000
Dr. Investment A/c
Cr.
Rs.
To Balance b/d Rs.
60,000 By Bank (Sale)
By Profit & Loss Alc (Loss on sale) 14,000
By Balance c/d 6,000
60.000 40,000
60,.000
Dr. Provision for Taxation Alc
Cr.
Rs.
To Bank (Tax paid) 35,000 Rs.
By Balance b/d
40,000
To Balance cld
By Profit & Loss Alc
75,000 (Tax provided for 1999 70,000
- bal. fig.)
110,000
L10.000
 Dr. 513
Proposed Dividend A/c Cr.

To Bank Rs. Rs.

dividend(assumed
that By Balance b/d 30,000
was paid proposed
in 1998 30,000 By Profit & Loss Alc
in
To Balance cld 1999) (Dividend proposed in 45,000
45,000 1999-- bal. fig.)
75,000 75,000

Dr. Adjusted Profit & Loss Alc Cr.

Rs. Rs.
To Provision for
on Fixed Depreciation
Assets By Balance b/d 1,15,000
To Misc. Exp. written off
51,000 By Profit on sale of Furniture 2,000
6,000 By Trading Profit
(20,000 - 14,000) (Balancing figure) 3,56,000
To Discarded Machine written off
To Transfer to Reserves
30,000
15,00
(50,000 - 35,000)
To Provision for Taxation
70,000
To Proposed Dividend 45,000
To Loss on sale of Investment
3,000
To Balance c/d 2.50,000
4,73,000 4,73.000

Calculation of Cash from Operations

Rs.
Trading Profit 3,56,000
Add: Decrease in Current Assets Rs.
Bills Receivable (45,000 - 35,000) 10,000
Prepaid Expenses (12,500 - 6,000) 6,500
Debtors (2,40,000 - 1,60,000) 80.000
96.500
4,52,500
Add: Increase in Current Liabilities : Rs.
Sundry Creditors (1,75,000 - 1,25,000) S0,000
Other Current Liab. (75,000 - 20,000) S5.000
L.05.000
5,57,500
Less : Increase in Current Assets: Rs.
Stock (2,75,000 - 65,000) 2.10,000
2.10,000
Cash from Operations 3.47,500

Cash FlowStatement of Symphony Ltd.

for the year ended 31 December, 1999
Inflow of Cash Rs. Outflow of Cash Rs.
Dpening Bank Balance 47,500 Purchase of Fixed Assets 2,65,000
Cash from Operations 3,47,500 Redemption of Redeemable Pref.
Cash from Other Sources : Share Capital (1,00,000 - 50,000) 50,000

3309-33
 528
Increase in Current Liabilities :
Sundry Creditors 5,000
Increase in
Current Assets :
Sundry Debtors ()6,000
Decrease in Current Liabilities :
Bill Payable () 5.000
()L.000
Cash Generated from
Less : Direct Tax paid Operations
79,000
NIL
Net Cash from
B. Cash Flow from Operating Activities
79,000
Investing Activities :
Purchase of Land and Buildings () 60,000
Purchase of Machinery () 40,000
Sale of Machinery 18,000
- 82,000
C. Cash Flow from
Financing Activities :
Fresh Capital Introduced 50,000
Drawings (-) 40,000
10.000
Net Increase in Cash and Bank Balance (A + B + C) 7.000
Rs.
Cash and Bank on 1.1.99 (Rs. (-1,00,000 + 5,000)] (H 95,000
Cash and Bank on 31.12.99 [Rs. (92,000 + 4,000)] (-) 88.000

sIR4 27. From the following information prepare a Cash Flow Statement for the year ended
31.3.1999.
Balance Sheet as at 31.3.98 and 31.3.99
Liabilities 1998 1999 Assets 1995 1999

Rs. Rs. Rs. Rs.

('000) ("000) "000) (000)
Share Capital 200.0 250.0 Land & Building 200.0 190.0
General Reserve S0.0 60.0 Plant & Machinery 150.0 169.0
Profit & Loss A/c 30.5 30.6 Stock 100.0 74.0
Bank Loan 70.0 Sundry Debtors 80.0 64.2
Sundry Creditors 150.0 135.2 Cash .5 6
Provision for Taxation 30.0 35.0 Bank 8.0
Goodwill S.0
530.5 S10.8 S30.5 510.8

Additional information :
(a) Dividend of Rs. 23.000 was paid.
(bThe following assets of another company were purchased for (Consideration of Rs. s0.000
paidfor in shares : Stock Rs. 20,000, Machinery Rs. 25,000.
(c Further Machinery was purchased for Rs. 25,000 during the car.
(d) Net profit for the year was' Rs. 66, 100.
(e) Depreciation written off on Building Rs. 10,000, Machiny Rs. 14,000.
() ncome Tax paid during the year Rs. 28,000. [C.U. (H). '92]
 529

Working Notes :
Dr. Provision for Tax Alc Cr.
Rs. Rs.
To Bank (Tax paid) 28,000 By Balance b/d 30,000
To Balance cld 35.000 By Profit & Loss Alc JJ000
63,000 63.000
Dr. Land & Building Alc Cr.
Rs.
Rs.
To Balance b/d 2,00,000 By Depreciation A/c 10,000
By Balance c/d L.90,900
2.00.000 2.00.000

Dr. Plant & Machinery Alc Cr.

Rs. Rs.
To Balance b/d 1,50,000 By Depreciation 14,000
To Share capital 25,000 By Bank Alc (Sale - bal. fig.) 17,000
To Bank Alc (Purchase) 25.000 By Balance cld L.69.000
2.00,000 2.00,000

Dr. Share Capital Ale Cr.

Rs. Rs.
By Balance b/d 2,00,000
By Stock Alc 20,000
By Machinery A/c 25,000
To Balance c/d 2,50,000 By Goodwill Alc
[50,000 - (20,000 + 25,000)] S.000
2.50.000 2.50,000

Dr. Adjusted Profit & Loss Ale Cr.

Rs. Rs.
To Depreciation By Balance b/d 30,500
on Land & Building 10,000 By Trading Profit
on Plant & Machinery 14,000 (Balancing figure) 90,100
To Transfer to General Reserve 10,000
(60,000 - 50,000)
To Provision for Tax 33,000
To Dividend 23,000
To Balance c/d 30,600
120,600 120.600

Statement Showing Cash from Operations

Rs.
Trading Profit 90,100
Add: Decrease in Current Assets : Rs.
Stock :(1,00,000 - (74,000 - 20,000) 46,000
Debtors : (80,000 -64,200) 1S,800
61.800
3309-34 1,51,900
 530
Less: Decrease in Current Liabilities : 14.800
Creditors: (1,50,000 1,35,200) 137.100
Cash from Operations for consideration other
Rs. 20,000 acquired
Stock on 31.3.98 is Rs. 74.000. This includes stock of 46,000.
20,000) = Rs.
than cash. So decrease in stock is 1,00,000 -((74,000 -

Cash FIow Statement of .

March, 1999
for the year ended 31
Outflow of Cash Rs.
Inflow of Cash Rs.
Purchase of Plant &
Machinery
25,000
Opening Cash Balance 500
Repayment of Bank
Loan 70,000
Cash from Operations 1,37,100 Payment of Dividend 23,000
Cash from Other Sources:
Payment of Tax
28,000
Cash Sales of Machinery 17,000 Closing Cash Balance 600
Closing Bank Balance 8.000
1.54,600
1,54,600

frg af (Cash from Operations at cafa)

Cash Flow Statement of.
for the year ended 31 March, 1999
Outflow of Cash Rs.
Inflow of Cash Rs.

Opening Cash Balance 500 Purchase of Plant & Machinery 25,000

Trading Profit 90,100 Repayment of Bank Loan 70,000
Cash Sales of Machinery 17.000 Payment of Dividend 23,000
Decrease in Current Assets : Payment of Tax 28,000
Stock 46,000 Decrease in Current Liabilities :
Debtors 15,800 Sundry Creditors 14,800
Closing Cash Balance 600
Closing Bank Balance 8.000
1.69,400 1.69,400

AS-3-(5 fds afo q t (According to AS-3)

Cash Flow Statement for the year ended 31 March, 1999

A. Cash Flow from Operating Activities :

Rs.
Operating Profit before Working Capital Changes 90,100
Adjustment for :
Decrease in Current Assets: Rs. Rs.
Stock
46,000
Debtors
1S,800
Decrease in Current Liabilities :
Creditors 61,800
(H14,800
47,000
 531

Cash Generated from Operations 1,37,100

Less: Direct Taxes paid () 28,000
Net Cash from Operating Activities 1,09,100
B. Cash Flow from Inyesting
Activities
Purchase of Plant &Machinery () 25,000
Cash Sale of Machinery 17,000
()8,000
C. Cash Flow from Financing Activities :
Repayment of Bank Loan () 70,000
Payment of Dividend () 23.000
() 93.000
Net Increase in Cash and Bank Balance (A + B + C) 8.100
Rs.
Cash and Bank Balance on 1.4.98 500
Cash and Bank Balance on 31.3.99 Rs. (600 + 8,000) 8.600

Giegt 28. From the following Balance Sheets of Fantacy Ltd. as on 31 March, 1998 and 31 March,
1999 prepare a Cash Flow Statement for the year ended 31 March, 1999.
Liabilities 31.3.98 31.3.99 Assets 31.3.98 313.99
Rs. Rs. Rs. Rs.
Equity Share Capital 5,00,000 7,50,000 Goodwill 50,000 30,000
(Shares of Rs. 100 each) Plant (Net) 7,50,000 10,00,000
15% Redeemable
Preference Share Capital 2,50,000 Investment 2,00,000 3,00,000
(Shares of Rs. 100 cach, Stock 4,50,000 2,60,000
Rs. 50 called up) Debtors 3,75,000 4,20,000
Share Premium Alc 12,500 Prepaid Exp. 25,000 15,000
Capital Redemption Bank 1,50,000 3,60,000
Reserve 5,00,000
General Reserve 5,60,000 2,00,000 Preliminary
Profit & Loss Ac 1,50,000 1,90,000 Expenses 35,000 5,000
Current Liabilities 5,00,000 7,00,000
Provision for Tax 62.500 50,000
20.35.000 23.90.000 20.35.000 23.90,000

Additional information :
(i) In December 1998 the company declared and paid a dividend of 20% on equity shares for the
year 1997-98 on capital balance of 31.3.98.
(i) Preference shares were redeemed out of profit at apremium of 59% after making them fully paid
up. Redemption was made on 30.9.98. Preference dividend for six months was paid just before
redemption.
(ii) One plant costing Rs. 50,000 (30% depreciated) was sold on 1.4.98 at a loss of Rs. 15,000.
On 31.3.99 Depreciation of Rs. 75,000 was charged on Plant.
(iv) Investment costing Rs. 20,000 became worthless and was written off to General Reserve.
(v) Dividend of Rs. 40,000was received on investment. S0% of dividend received was credited
to investment account.
(vi) Tax payment for the year 1998-99 was Rs. 52,500.
(vi)Cash stolen by adishonest employee and detected on 31 January, 1999- Rs. 6,500.
 571

Statement Total
|Ans : NO change in Working Capital. Trading Profit- Rs. 61.500, Fund Flow
Rs. 1,99,500.]
|Hints : Purchase of Plant & Machinery- Rs. 1.19.500. Repayment of Bank Loan- Ks. Z,0,
Loan taken from A- Rs. 25,000, Net Protit
Sale of Land- Rs. 72,000, Sale of Machinerv- Rs. 11.000.
from Partners' Capital Accounts (balancing figure)- Rs. 50,000.J
Cash Flow Statement (Profit Basis)
Balance Sheets of Krishna Glass Ltd. as at 31 December, 1998 and 31
41. The summarised
December, 1999 are given below: 31.12.'99
31.12. 98
31.12. 98 31.12. 99 Assets Rs.
Liabilities Rs.
Rs. Rs.
40,000 20,000
3,00,000 Goodwill 2,80,000
Share Capital 2,25,000 2,00,000
1,75,000 Plant & Machinery (net)
General Reserve 1,50,000 60,000 1,10,000
39,000 Investment
Profit & Loss A/c 28,000 1,50,000 1,20,000
84,000 67,000 Stock
Creditors 50,000 1,15,000
1,24,000 Debtors
Mortgage Loan 15,000 5.000
Provision for Tax 33,000 25,000 Prepaid Exp. 80.000
Bank 5.000
5.20.000 2.30,000
5.20,000 2,30,000

Additional Information :
(depreciation charged Rs. 18,000) were sold
(a) During 1999 Plant & Machinery costing Rs. 35,000Machinery was Rs. 25,000 in 1999.
at a loss of Rs. 3,000. Depreciation charged on Plant &
during the year it was written off to general
(b) Investment worth Rs 10,000 became obsolete and
reserve.
(c) A dividend of Rs. 20,000 was paid on 30.9.99.
(d) Provision for tax made during 1999 was Rs. 28,000.
You are required to prepare a Cash Flow Statement of the company for the year ended 31
December, 1999.
JAns : Trading Profit- Rs. 1,42,000, Cash from Operations- Rs. 1,00,000, Cash Flow Statement
Total- by showing Cash fromn Operations- Rs. 3,18,000, by not showing Cash from Operations
separately- Rs. 4,00,000. As per New Format (AS-3) : Net Cash Flow from Operating Activities : Rs.
64,000, Net Cash Flow from Investing Activities : Rs. () 1,68,000, Net Cash Flow from Financing
Activities: Rs. 1,79,000, Net increase in Cash and Bank : Rs. 75,000.]
Hints :Purchase of Plant &Machinery- Rs. 1,22,000, Investment made- Rs. 60,000, Issue of Share
Capital- Rs. 75,000, Mortgage Loan taken- Rs. 1,24,000, Sale of Plant- Rs. 14,000.].
42. The Balance Sheets of Jyoti Metal Ltd. for the year ended 31 December, 1998 and 31 December,
1999 are as follows:

Liabilities 31.12. 98 31.12.'999 Assets 31.12.'98 31.12. 99

Rs. Rs. Rs. Rs.

Equity Share Capital 4,00,000 5,00,000 Freehold Property at cost 2,90,000 3,70,000
Share Premium 20,000 Leasehold Property at cost 10,000
Profit on sale of Plant & Machinery at cost 3,60,000 4,20,000
Leasehold Property 5,000 Less: Depreciation (144,000) (1.86.000)
Profit on Redemption 2,16,000 2,34,000
of Debentures 800 Shares in Subsidiary