CASH FLOW STATEMENT

Q. 1 (Presentation in Cash Flow Statement)

The following balances appeared in Plant Account and Accumulated

Depreciation Account in the books of Bharat Ltd :
Balances as at 31.3.2003 31.3.2004
Rs. Rs.
Plant 7,50,000 9,70,000
Accumulated Depreciation 1,80,000 2,40,000

Additional Information:
Plant costing Rs. 1, 45,000; accumulated depreciation thereon Rs. 70,000, was sold for Rs. 35,000.

You are required to:

(i) Compute the amount of Plant purchased, depreciation charged for the year and loss on sale of plant.
(ii) Show how each f the items related to the plant will be shown in the cash flow statement.

Q. 2 (Presentation in Cash Flow Statement)

The following balances appeared in Machinery Account and Accumulated Depreciation Account in the books of Jai
Bharat Ltd.:

Balances as at 31.3.2003 31.3.2004

Rs. Rs.
Machinery Account 17,78,985 26,55,450
Accumulated Depreciation Account 3,40,795 4,78,690

Additional Information:
Machinery costing Rs. 2, 65,000 on which accumulated depreciation was Rs. 1,00,000, was sold for Rs.
75,000.

You are required to:

1. Compute the amount of machinery purchased, depreciation charged for the year and loss on sale of
machinery.
2. How shall each of the items related to machinery be show in the Cash Flow Statement?

Q. 3 (Operating and Investing Activities)

JMD Ltd. Had the following balances:- Investments at the end of 2002 Rs.
40,000
Investments at the end of 2003 Rs. 33,200

During the year the company had sold 25% of its investments at a profit of Rs. 9,000.

Calculate Cash from Operating Activities, Investing Activities. If the company has earned a profit of Rs. 20,000
during the year.

Q. 4 (Operating Activities)
Gurdeep Ltd. made a profit of Rs. 1, 00,000 after charging Depreciation of Rs. 20,000 on assets and a transfer to
General Reserve of Rs. 30,000. The goodwill written off was Rs. 7,000 and the gain on sale of Machinery was Rs.
3,000. The other information available to you (changes in the value of Current Assets
&& Current Liabilities) is as follows:

At the end of the year Debtor showed an increase of Rs. 6,000; Creditors an increase of Rs. 10,000; Prepaid
Expenses an increase of Rs. 200; Bills Receivable a Decrease of Rs. 3,000; Bills Payable a Decrease of Rs. 4,000
and Outstanding Expenses a Decrease of Rs. 2,000. Ascertain the cash flow from the operating activities.
 Q. 5 (Operating Activities)
From the following summarized Balance Sheets of a company, calculate the Cash Flow from operating activities :

Liabilities 2004 2005 Assets 2004 2005

Rs. Rs. Rs. Rs.
Creditors 20,000 25,000 Cash 20,000 10,000
Bills Payable 20,000 5,000 Investments 40,000 30,000
Other current Liabilities 40,000 45,000 Stock 30,000 45,000
6% Debentures 60,000 80,000 Debtors 30,000 40,000
Profit and Loss A/c 80,000 1,10,000 Gross Block 1,00,000 1,40,000
2,20,000 2,65,000 2,20,000 2,65,000

Q. 6 (Operating Activities)
Gyan Ltd. had a profit of Rs. 17, 50,000 for the year ended 31.3.2006 after considering the following:
Depreciation on building Rs. 1,30,000
Depreciation on plant and machinery Rs. 40,000
Goodwill written off Rs. 25,000
Loss on sale of machinery Rs. 9,000

Following was the position of current assets and current liabilities of the company as on 31.3.2005 and
31.3.2006.

31.3.2005 31.3.2006
Rs. Rs.
Stock 70,000 87,000
Bills Receivable 67,000 58,000
Cash Creditors 60,000 75,000
Outstanding Salary 68,000 77,000
Bills Payable 7,000 4,000
43,000 29,000

Calculate cash flow from operating activities.

Q. 7 (Operating Activities)

With the help of the following profit and loss account for the year ended 31.3.2006 and
Balance Sheets as on 31.3.2005 and 31.3.2006 of Gurdeep Ltd. Calculate cash flow operating activities :

PROFIT AND LOSS ACCOUNT OF GURDEEP LTD.

t
for the year ending March 31s , 2006
Dr. Cr.
Particulars Rs. Particulars Rs.
To Depreciation 17,000 By Gross Profit 5,00,000
To Salary 35,000
To Rent 72,000
To Commission 23,000
To Other Expenses 43,000
To Net Profit 3,10,000
5,00,000 5,00,000
To Proposed Dividend 1,50,000 By Net Profit 3,10,000
To Retained Profit 1,60,000
3,10,000 3,10,000
 BALANCE SHEETS

Liabilities 2005 2006 Assets 2005 2006

Rs. Rs. Rs. Rs.
Share Capital 2,00,000 3,50,000 Plant 4,75,000 5,40,000
Reserve 60,000 30,000 Patents - 50,000
Loan 20,000 30,000 Stock 1,05,000 1,20,000
Proposed Dividend 20,000 1,70,000 Debtors 70,000 90,000
Creditors 1,80,000 10,000
Bills Payable 1,70,000 20,000
6,50,000 8,00,000 6,50,000 8,00,000

Q. 8 (Operating Activities) Sehajta Ltd. had a profit of Rs. 20,00,000 for the year ended 31.3.2006 after
considering the following :

Depreciation on building Rs. 55,000

Depreciation on plant and machinery Rs. 37,000
Goodwill written off Rs. 14,000
Loss on sale of plant and machinery Rs. 8,000

Following was the position of Current Assets and Current Liabilities of the company as on 31 st March, 2005 and 31st
March, 2006.

Particulars 31.3.2005 31.3.2006

Rs. Rs.
Stock 65,000 69,000
Debtors 40,000 25,000
Cash 47,000 74,000
Creditors 94,000 1,03,000
Outstanding Expenses 5,000 3,000
Bills Payable 49,000 58,000

Calculate Cash Flow from Operating Activities.

Q. 9 (Operating Activities) With the help of the Profit and Loss Account for the year ended 31.3.2006 and Balance
Sheets as on 31.3.2005 and 31.3.2006 of Gyan Ltd., Calculate 'Cash Flow from Operating Activities' :

PROFIT AND LOSS ACCOUNT

for the year ended March 31.3.2006
Dr. Cr.
Particulars Rs. Particulars Rs.
To Depreciation 12,000 By Gross Profit 4,50,000
To Salary 40,000
to Rent 70,000
To Commission 30,000
t Other Expenses 78,000
To net Profit 2,20,000
4,50,000 4,50,000
To Proposed Dividend 50,000 By Net Profit 2,20,000
To Retained Profit 1,70,000
2,20,000 2,20,000

Q. 10 (Treatment of Depreciation) From the following Balance Sheets of Gurdeep Ltd. prepare Cash Flow
Statement :

Liabilities 1997 1998 Assets 1997 1998

Rs. Rs. Rs. Rs.
Equity Share Capital 1,50,000 2,00,000 Goodwill 36,000 20,000
12% preference Share Capital 75,000 50,000 Building 80,000 60,000
General Reserve 20,000 35,000 Plant 40,000 1,00,000
Profit and Loss A/c 15,000 24,000 Debtors 1,19,000 1,54,500
Creditors 37,500 49,500 Stock 10,000 15,000
Cash 12,500 9,000
2,97,500 3,58,500 2,97,500 3,58,500
Depreciation charged on plant was Rs. 10,000 and on Building Rs. 60,000.

Q. 11 (Treatment of Depreciation) From the following Balance Sheet of Gyan Ltd., prepare Cash Flow statements
Liabilities 2000 2001 Assets 2000 2001
Rs. Rs. Rs. Rs.
Equity Share Capital 2,00,000 2,50,000 Goodwill 10,000 2,000
12% preference Share Capital 1,00,000 80,000 Land & Building 2,00,000 2,80,000
General Reserve 50,000 70,000 Machinery 1,00,000 1,30,000
Creditors Bills 40,000 60,000 Debtors 40,000 60,000
Payable Outstanding 20,000 1,00,000 Stock 70,000 90,000
Expenses 25,000 20,000 Cash 15,000 18,000
4,35,000 5,80,000 4,35,000 5,80,000

Q. 12 (Treatment of Depreciation, Tax & Dividend) From the following Balance Sheet of Gurdeep Steel ltd.,
prepare Cash Flow Statement :
Liabilities 31.3.2007 31.3.2008 Assets 31.3.2007 31.3.2008
Rs. Rs. Rs. Rs.
Equity Share Capital 40,000 60,000 Goodwill 10,000 8,000
12% Preference Share Capital 20,000 10,000 Land and Building 20,000 10,000
General Reserve 4,000 6,000 Plant 18,000 38,200
Profit and Loss A/c 3,600 5,400 Trade Investments 2,000 7,000
Proposed Dividend 5,600 7,800 Debtors 15,000 21,600
Bills Payable 7,000 10,600 Stock 17,000 15,600
Provision for Tax 5,600 6,400 Cash 3,400 5,600
Outstanding Expenses 1,600 1,200 Preliminary Expenses 2,000 1,400
87,400 1,07,400 87,400 1,07,400

Q. 13 (Treatment of Tax & Dividend) The Balance Sheets of Gyan Limited Company were as follows:-
 BALANCE SHEETS
Liabilities 2002-2003 2003-2004 Assets 2002-2003 2003-2004
Rs. Rs. Rs. Rs.
Share Capital 40,000 65,000 Fixed Assets 36,500 78,000
Profit and Loss A/c 10,000 15,000 Stock-in-hand 11,000 13,000
12% Debentures - 10,000 Debtors 13,000 5,000
Bills Payable 18,500 21,000 Bills Receivables 5,000 7,500
Provision for Taxation 5,000 7,500 Cash In Hand 7,000 15,000
Discount on Issue of Shares 1,000 -
73,500 1,18,500 73,500 1,18,500

Additional Information :
(i) Dividend of Rs. 1,250 was paid during the year.
(ii) Income Tax Rs. 5,000 was paid during the year.
Prepare Cash Flow Statement as per AS-3 (Revised)

Q. 14 (Treatment of Tax, Dividend & Accumulated Depreciation) From the Balance Sheets of Gurdeep Singh
Ltd., prepare a Cash Flow Statement as per AS-3 (Revised) :

BALANCE SHEETS
Liabilities 2000 2001 Assets 2000 2001
Rs. Rs. Rs. Rs.
Share Capital 2,88,000 3,20,000 Fixed Assets 2,40,000 4,00,000
Reserves and Surplus 64,000 80,000 Less : Accumulated
Bank Loan 80,000 60,000 Depreciation 64,000 1,20,000
Creditors Bills 2,48,000 2,40,000 1,76,000 2,80,000
Payable Proposed — 4,000 Goodwill 64,000 56,000
Dividend Income 36,000 48,000 Investments 72,000 88,000
Tax Payable 20,000 24,000 Stock 1,60,000 1,80,000
Debtors 1,60,000 1,52,000
Bank 1,04,000 20,000
7,36,000 7,76,000 7,36,000 7,76,000

Additional Information :
(i) During the year a part of the Machinery costing Rs. 40,000 was sold for Rs. 20,000.
(ii) Depreciation provided during the year Rs. 80,000.
(iii) Interim Dividend paid during the year Rs. 20,000.

Q. 15 (Treatment of Tax & Sale of Machinery) From the Balance Sheets of Gyan Ltd. As on 31-12-2007, prepare
a Cash Flow Statement for the year ended 31-12-2007 as per AS-3 (Revised) :

BALANCE SHEETS
Liabilities 2006 2007 Assets 2006 2007
Rs. Rs. Rs. Rs.
Equity Share Capital 1,50,000 2,00,000 Fixed Assets 3,25,000 3,25,000
9% Preference Share Capital 1,10,000 50,000 Investments 20,000 45,000
8% Debentures 80,000 1,00,000 Current Assets 50,000 1,37,500
Reserves & Surplus 50,000 1,10,000 Bank 15,000 20,000
Current Liabilities 30,000 85,000 Discount on issue of Equity

Shares 10,000 7,500

4,20,000 5,35,000 4,20,000 5,35,000
Additional Information :
(i) During the year 2007 a part of the Machine costing Rs. 40,000 (Accumulated Depreciation thereon Rs.
25,000) was sold for Rs. 7,500.
(ii) Depreciation charged during the year 2007 was Rs. 25,000.

Q. 16 (Treatment of tax and depreciation) From the following Balance Sheets of Gurdeep Ltd. Prepare Cash
Flow Statement as per AS-3 (Revised) :
BALANCE SHEETS
Liabilities 2007 2006 Assets 2007 2006
Rs. Rs. Rs. Rs.
Equity Share Capital 72,000 60,000 Building 96,000 97,200
8% Preference Share Capital 30,000 24,000 Plant 22,800 34,800
Reserve Fund 20,400 16,800 Debtors 19,200 24,000
Profit and Loss A/c 15,600 5,760 Stock 8,400 2,400
Bank Loan 6,600 4,800 Bills Receivable 14,400 3,600
Creditors 18,000 21,960 Cash 16,200 1,200
Bills Payable 10,800 14,040 Bank 13,200 2,160
Income Tax Payable 16,800 18,000
1,90,200 165360 1,90,200 1,65,360

Additional Information :
(i) Tax paid during the year 2007 Rs. 14,400.
(ii) Depreciation on plant charged during the year 2007 was Rs. 14,400.

Q. 17 (Treatment of Drawings in the case of Proprietorship Business) From the following particulars of Mr.
Gyan. Prepare a Cash Flow Statement as per AS-3 (Revised)

BALANCE SHEETS
Liabilities 31.3.2003 31.3.2004 Assets 31.3.2003 31.3.2004
Rs. Rs. Rs. Rs.
Creditors 75,000 1,05,000 Cash 10,000 12,500
Mr. Gyan's Loan 12,500 50,000 Debtors 62,500 1,00,000
Bank Loan 50,000 25,000 Stock 50,000 62,500
Capital 3,50,000 4,00,000 Land 62,500 90,000
Depreciation Provision 25,000 37,500 Building 1,25,000 1,37,500
Machinery 2,02,500 2,15,000
5,12,500 6,17,500 5,12,500 6,17,500

Additional Information :
During the year 2003-2004, Mr. Gyan had drawn Rs. 55,000 for domestic use. A part of the machine costing Rs.
25,000 (accumulated depreciation thereon Rs. 20,000) was sold for Rs. 12,500.

Q. 18 (Treatment of Depreciation & Non-Cash Transactions) From the following Balance Sheets of Gurdeep
Ltd. Prepare Cash Flow Statement as per AS-3 (Revised) :

BALANCE SHEETS
 Liabilities 31.3.2001 31.3.2002 Assets 31.3.2001 31.3.2002
Rs. Rs. Rs. Rs.
Equity Share Capital Profit 64,000 72,000 Goodwill 8,000 5,600
and Loss Account 59,600 64,000 Other Fixed Assets Short 1,12,000 1,52,000
Accumulated Depreciation 32,400 27,200 Term Investments Other 8,000 4,800
Securities Premium 8,000 12,000 Current Assets Preliminary 29,600 22,400
Current Liabilities 20,000 24,000 Expenses Discount on 20,000 9,600
Issue of shares 6,400 4,800
1,84,000 1,99,200 1,84,000 1,99,200

Additional Information :
(i) Depreciation provided during the year Rs. 17,600. A Part of the Machine costing Rs. 12,400 had been
condemned and scrapped.
(ii) Assets of another company were purchased and purchase consideration was paid as under :
(a) Issuing Rs. 8,000 Equity Shares at premium.
(b) Balance in Cash.

Q. 19 (Treatment of Interim Divided, Tax & Depreciation) From the following Balance Sheets of Gyan Ltd.
Prepare a Cash Flow Statement as per AS-3 (Revised)

BALANCE SHEETS
Liabilities 31.3.2001 31.3.2002 Assets 31.3.2001 31.3.2002
Rs. Rs. Rs. Rs.
Share Capital 1,35,000 2,16,000 Building 88,020 1,09,620
Securities Premium 6,750 13,500 Machinery 33,885 68,850
General Reserve 10,800 16,200 Furniture and Fittings 16,740 3,375
Profit and Loss A/c 23,625 27,000 Stock 42,525 56,700
10% Debentures 8,100 28,350 Sundry Debtors 29,700 54,000
Sundry Creditors 29,025 27,135 Bank 21,330 69,660
Provision for Taxation 9,450 13,770 Patents 6,750 —
Proposed Dividend 16,200 20,250
2,38,950 3,62,205 2,38,950 3,62,205

Additional Information :
(i) Interim Dividend of Rs. 13,500 was paid during the year.
(ii) Income Tax Provision was made during the year for Rs. 12,150.
(iii)Provision for Depreciation on Machinery on 31.3.2001 and 31.3.2002 were Rs. 6,750 and Rs. 13,500
respectively.
(iv)A part of the Furniture sold at book value.