Vous êtes sur la page 1sur 12

Problems on cash flow statements

1. The following is the summary of cash transactions of Anju Ltd. for the year ended March 31, 2005.
(Amount in ‘000)
Receipts Rs. Payments Rs.
Balance as on 1.4.2004 150 Payment to creditors 6,000
Issue of equity shares 900 Purchase of fixed assets 600
Receipts from customers 8,400 Expenses 600
Sale of fixed assets 300 Wages and salaries 300
Tax 750
Dividends 150
Repayment of bank loan 900
Balance as on 31.3.2005 450

9,750 9,750
You are required to prepare a Cash flow statement for the year ended March 31, 2005 in
accordance with AS-3 (Revised) using direct method.
Solution 1:
Cash flow statement of Anju Ltd. For the year ended March 31, 2005
(Amount in ‘000)
Particulars Rs. Rs.
i. Cash flow from operating activities
Receipts from customers 8,400
Payment to creditors (6,000)
Payment of wages and salaries (300)
Payment of overhead expenses (600)
Cash generated from operations 1500
Payment of tax (750)
Net flow from operating activities 750
ii. Cash flow from investing activities
Proceeds on sale of fixed assets 300
Acquisition of fixed assets (600)
Net flow from investing activities (300)
iii. Cash flow from financing activities
Proceeds on issue of shares 900
Payment of dividends (150)
Repayment of bank loan (900)
Net flow used in financing activities (150)
Net cash flow for the year ended March 31,2005 300
Cash balance at the beginning of the period 150
Cash balance at the end of the period 450

2. The summarized Balance Sheet of M/s Ankit Ltd as at March 31, 2005 and 2006 are given below.
Balance Sheet of M/s Ankit Ltd. as on March 31, 2005 and 2006
Particulars 2005 Rs. 2006 Rs. Particulars 2005 Rs. 2006 Rs.
Share Capital 9,00,000 9,00,000 Fixed Assets 8,00,000 6,40,000
General Reserve 6,00,000 6,20,000 Investments 1,00,000 1,20,000
Profit & loss a/c 1,12,000 1,36,000 Stock 4,80,000 4,20,000
Creditors 3,36,000 2,68,000 Debtors 4,20,000 9,10,000
Provision for tax 1,50,000 20,000 Bank 2,98,000 3,94,000
Mortgage loan - 5,40,000
20,98,000 24,84,000 20,98,000 24,84,000
Additional Information:
i. Investments costing Rs.16,000 were sold during the year for Rs.17,000
ii. Provision for tax during the year Rs.18,000
iii. During the year, a part of the fixed assets costing Rs.20,000 was sold for Rs.24,000 and
the profit was included in Profit and Loss account
iv. Dividends paid amounted to Rs.80,000
You are required to prepare a Cash Flow Statement in accordance with AS 3 accounting standard

Solution 2
Cash flow statement of Ankit Ltd. For the year ended March 31, 2006
(Amount in ‘000)
Particulars Rs. Rs.
i. Cash flow from operating activities
Cash flow from operating activities before 2,77,000
working capital changes
Decrease in Stock 60,000
Increase in Debtors (4,90,000)
Decrease in Creditors (68,000)
Tax Paid during the year (1,48,000)
Net flow from operating activities (3,69,000)
ii. Cash flow from investing activities
Proceeds on sale of investments 17,000
Proceeds on sale of fixed assets 24,000
Purchase of investments (36,000)
Net flow from investing activities 5,000
iii. Cash flow from financing activities
Raising of Mortgage loan 5,40,000
Payment of dividends (80,000)
Net flow from financing activities 4,60,000
Net cash flow for the year ended March 31,2005 96,000
Cash balance at the beginning of the period 2,98,000
Cash balance at the end of the period 3,94,000

Working Notes:
Fixed Assets Account
Particulars Rs. Particulars Rs.
To Balance b/d 8,00,000 By Bank 24,000
To Profit & loss a/c 4,000 By Depreciation 1,40,000
By Balance c/d 6,40,000
8,04,000 8,04,000

Investments Account
Particulars Rs. Particulars Rs.
To Balance b/d 1,00,000 By Bank 17,000
To Profit & loss a/c 1,000 By Balance c/d 1,20,000
To Bank 36,000
1,37,000 1,37,000

Provision for tax Account


Particulars Rs. Particulars Rs.
To Bank 1,48,000 By Balance b/d 1,50,000
To Balance c/d 20,000 By Profit & loss a/c 18,000
1,68,000 1,68,000

Calculation of cash from operations:


Closing Balance of Profit & loss a/c 1,36,000
Add: Non-operating expenses
Dividends 80,000
General Reserve 20,000
Depreciation 1,40,000
Provision for tax 18,000 2,58,000
3,94,000
Less: Non-operating incomes
Profit on sale of investments 1,000
Profit on sale of fixed assets 4,000 5,000
Opening Balance of Profit & loss a/c 1,12,000
Cash from operations before Working Capital Changes 2,77,000

3.
The financial position of MNR Ltd. on 1st April 2005 and 31st March 2006 was as follows
1-4-2005 31-3-2006 1-4-2005 31-3-2006
Rs. Rs. Rs. Rs.
Current Liabilities 3,60,000 4,10,000 Cash 40,000 36,000
Loan from -- Debtors 3,50,000 3,84,000
associate Stock 2,50,000 2,20,000
company 2,00,000 Land 2,00,000 3,00,000
Loan from Bank 3,00,000 2,50,000 Buildings 5,00,000 5,50,000
Capital and Reserves 14,80,00 14,90,000 Machinery 10,70,00 12,20,000
0 0
Prov.for 2,70,000 3,60,000
Depreciation
24,10,00 27,10,000 24,10,00 27,10,00
0 0 0
During the year Rs. 2,60,000 were paid as dividends. You are required to prepare a Cash Flow
Statement as per Revised AS-3.

Solution 3:

Cash Flow Statement of MNR Ltd for the year 2005 – 06


Rs. Rs.
(A) Cash Flows from Operational Activities
Net profit before taxation and extraordinary items 2,70,000
(14,90,000 – 14,80,000 + 2,60,000 dividend)
Adjustment for Depreciation 90,000
Profit from Trading Operations 3,60,000
Increase in Sundry Debtors (34,000)
Decrease in Stock 30,000
Increase in Current Liabilities 50,000
Net Cash from Operational Activities 4,06,000
(B) Cash Flows from Investing Activities
Purchase of Building (50,000)
Purchase of Land (1,00,000)
Purchase of Machinery (1,50,000)
Net Cash used on investing activities (3,00,000)
(C) Cash Flows from Financing Activities
Loan from Associated Company 2,00,000
Repayment of Bank Loan (50,000)
Payment of Dividend (2,60,000)
Net decrease in Cash and Cash equivalents (1,10,000)
(4,000)
Cash and Cash equivalents at the beginning of the period 40,000
Cash and Cash equivalents at the end of the period 36,000

4. Sun Ltd gives you the following information for the year ended March 31, 2006
a. Sales for the year totaled Rs.96,00,000. The company sells goods for cash only.
b. Cost of goods sold was 60% of sales. Closing inventory was higher than opening inventory by
Rs.43,000. Trade creditors on March 31, 2006 exceede those on March 31st, 2005 by Rs.23,000
c. Net profit before tax was Rs.13,80,000. Tax paid amounted to Rs.7,00,000. Depreciation on
fixed assets for the year was Rs.3,15,000 where as other expenses totaled Rs.21,45,000.
Outstanding expenses on March 31, 2005 and on March 31st, 2006 were Rs.82,000 and
Rs.91,000 respectively.
d. New machinery and furniture costing Rs.10,27,500 in all were purchased.
e. A rights issue was made of 50,000 equity shares of Rs.10 each at a premium of Rs.3 per share.
The entire money was received with applications.
f. Dividends paid amounted to Rs.4,07,000.
g. Cash in hand and at bank on March 31st, 2005 and March 31st, 2006 are Rs.2,13800 and
Rs.4,13,300.
You are required to prepare a cash flow statement using (a) direct method and (b) indirect method.

Solution 4.
(a) Direct Method
Cash flow statement of Sun Ltd for the year ended March 31, 2006
Particulars Rs Rs
Cash flows from operating activities:
Cash receipts from customers 96,00,000
Cash paid to suppliers and employees (79,16,000)
Cash inflow from operations 16,84,000
Tax paid (7,00,000)
Net cash from operating activities 9,84,000
Cash flows from investing activities:
Purchase of fixed assets (10,27,500)
Net cash used in investing activities (10,27,500)
Cash flows from financing activities:
Proceeds from issue of share capital 6,50,000
Dividends and corporate dividend tax paid (4,07,000)
Net cash from financing activities 2,43,000
Net increase in cash and cash equivalents 1,99,500
Cash and cash equivalents as at March 31, 2005 2,13,800
Cash and cash equivalents as at March 31, 2006 4,13,300
Working notes:
(i) Calculation of cash paid to suppliers and employees
Cost of sales (60% of Rs.96,00,000) 57,60,000
Add: Expenses incurred 21,45,000
outstanding expenses on March 31, 2005 82,000
closing inventory excess over opening inventory 43,000
80,30,000
Less: Excess of closing creditors over opening creditors 23,000
outstanding expenses as on March 31, 2006 91,000
79,16,000
(b) Indirect Method:
Cash flow statement of Sun Ltd for the year ended March 31, 2006
Particulars Rs Rs
Cash flows from operating activities:
Net Profit before tax 13,80,000
Add: depreciation 3,15,000
Operating profit before working capital changes 16,95,000
Adjustments for:
Increase in inventory (43,000)
Increase in trade creditors 23,000
Increase in outstanding expenses 9,000
Net cash from operating activities 16,84,000
Less tax paid (7,00,000) 9,84,000
Cash flows from investing activities:
Purchase of fixed assets (10,27,500)
Net cash used in investing activities (10,27,500)
Cash flows from financing activities:
Proceeds from issue of share capital 6,50,000
Dividends and corporate dividend tax paid (4,07,000)
Net cash from financing activities 2,43,000
Net increase in cash and cash equivalents 1,99,500
Cash and cash equivalents as at March 31, 2005 2,13,800
Cash and cash equivalents as at March 31, 2006 4,13,300

5. Pioneer Ltd’s summarized balance sheets as at March 31, 2005 and March 31, 2006 are given below
Balance Sheet of Pioneer Ltd. as on March 31, 2005 and 2006
Particulars 2005 Rs. 2006 Rs. Particulars 2005 Rs. 2006 Rs.
Equity share capital 5,00,000 12,00,000 Plant & machinery 7,00,000 9,00,000
Securities premium - 3,50,000 Furniture & fixtures 90,000 81,000
General reserve 2,80,000 3,30,000 Stock 4,25,000 6,19,000
Profit & loss a/c 60,000 59,750 Debtors 1,20,000 2,30,000
13% convertible 3,00,000 - Cash at bank 2,52,500 5,80,000
debentures Share issue expenses - 20,000
Bills payable 50,000 30,000 Cost of issue of 5,000 -
debentures
Sundry creditors 1,90,000 1,95,000
Provision for tax 1,30,000 1,52,500
Proposed dividends 75,000 1,02,500
Provision for 7,500 10,250
corporate dividend
tax
15,92,500 24,30,000 15,92,500 24,30,000
The following additional information is provided for you:
i. On April1st, 2005 13% convertible debentures of the face value of Rs.3,00,000 were converted
into 20,000 equity shares of Rs.10 each issued at a premium of Rs.5 each.
ii. Plant was purchased during the year for Rs.3,00,000; half of the consideration was discharged by
issue to the vendor 10,000 equity shares of Rs.10 each at a premium of Rs.5 each while the
balance was paid in cash.
iii. Tax liability for the accounting year 2004-05 Rs.1,30,000 was discharged in May, 2005.
iv. Proposed dividend and corporate dividend tax thereon for 2004-05 was paid in August, 2005.
You are required to prepare a cash flow statement for the year ended March 31st, 2006.

Solution 5:
Cash flow Statement (CFS) for the year ended 31.3.2006
Particulars Amount Amount
a. Cash flow from operating activities (Indirect approach)
Closing balance of profit and loss a/c 59,750
Less: Opening balance of profit & loss a/c 60,000
Net decrease in profit & loss a/c (250)
Add: non-cash and non-operating expenses
Depreciation on plant & machinery 1,00,000
Depreciation on furniture 9,000
Cost of issue of debentures written off 5,000
Transfer to general reserve 50,000
Proposed dividends 1,02,500
Dividend tax on proposed dividends 10,250
Provision for tax 1,52,500
Cash from operations before tax 4,29,000
Less tax paid (1,30,000)
Cash from operations before working capital changes 2,99,000
Adjustments for WC changes
Increase in stock (1,94,000)
Increase in debtors (1,10,000)
Decrease in Bills payable (20,000)
Increase in creditors 5,000
Cash used in operating activities (20,000)
b. Cash flows from investing activities
Purchase of machinery (1,50,000)
Cash used in investing activities (1,50,000)
c. Cash flows from financing activities
Issue of share capital 4,00,000
Receipt of share premium 2,00,000
Dividends paid (75,000)
Dividend tax paid (7,500)
Expenses of share issue (20,000)
Cash from financing activities 4,97,500
Net increase in cash and cash equivalents 3,27,500
Add: opening balance of cash and cash equivalents 2,52,500
Closing balance of cash and cash equivalents 5,80,000
WN-1:
a. Dr. Plant & Machinery a/c Cr.
Particulars Amount Particulars Amount
To Balance b/d 7,00,000 By depreciation 1,00,000

To purchase of machinery 1,50,000 By balance c/d


9,00,000
(cash)
To purchase of plant (shares) 1,50,000
10,00,00
10,00,000
0
6. From the following information prepare cash flow statement for the year ended 31.12.2004 by Indirect
Method:
Balance Sheet as at 31st December
Liabilities 2003 2004 Assets 2003 2004
Share capital 3,00,000 3,50,000 Land & Buildings 2,20,000 3,00,000
Bank overdraft 3,20,000 2,00,000 Machinery 4,00,000 2,80,000
Bills payable 1,00,000 80,000 Stock 1,00,000 90,000
Creditors 1,80,000 2,50,000 Debtors 1,40,000 1,60000
Cash 40,000 50,000
9,00,000 8,80,000 9,00,000 8,80,000
Additional Information
a. Net profit for the year 2004 amounted to Rs.1,20,000
b. During the year, a Machinery costing Rs.50,000 (accumulated depreciation Rs.20,000) was
sold for Rs.26,000. The provision for depreciation against Machinery as on 31.12.2003 was
Rs.1,00,000 and on 31.12.2004 Rs.1,70,000.

Solution 6:
Cash flow Statement (CFS) for the year ended 31.12.2004
Particulars Amount Amount
a. Cash flow from operating activities (Indirect approach)
Profit before tax and extra ordinary items 1,20,000
Add: Depreciation [WN (b)] 90,000
Add: Loss on sale of asset (WN-1(c)] 4,000
Operating profit before working capital changes 2,14,000
Adjustments for WC changes
Decrease in stock 10,000
Increase in debtors (20,000)
Decrease in Bills payable (20,000)
Increase in creditors 70,000
Decrease in Bank overdraft (1,20,000)
Cash from operating activities 1,34,000
b. Cash flows from investing activities
Sale of machinery 26,000
Purchase of Land & Buildings (80,000) (54,000)
c. Cash flows from financing activities
Drawings (WN-2) (70,000)
Increase in cash & cash equivalents 10,000
WN-1:
a. Dr. Machinery a/c (at cost) Cr.
Particulars Amount Particulars Amount
To Balance b/d 5,00,00 By sale of machinery a/c 50,000
(4,00,000 + 1,00,000) 0
By balance c/d 4,50,000
5,00,00
5,00,000
0
b. Dr. Depreciation Reserves a/c Cr.
Particulars Amount Particulars Amount
To Sale of Machinery a/c 20,000 By balance b/d 1,00,000
To Balance c/d 1,70,00 By P&L a/c (c.y. depn.)
90,000
0
1,90,00
1,90,000
0
c. Dr. Sale of Machinery a/c Cr.
Particulars Amount Particulars Amount
To Machinery a/c 50,000 By Depreciation Reserves a/c 20,000
By Bank (sale) 26,000
By P&L a/c– Loss on sale 4,000
50,000 50,000
WN-2:
Rs.
Opening capital 3,00,000
Add: Profit during the year 1,20,000
4,20,000
Less: Closing capital 3,50,000
Drawings 70,000
Reconciliation:
Opening cash balance 40,000
Closing cash balance 50,000
Increase in cash 10,000

7. The following data were provided by the accounting records of Nally Ltd. At the year end March
31¸2004.
Income statement
Particulars Rs.
Sales 1,39,600
Cost of goods sold 1,04,000
Gross Margin 35,600
Operating expenses including depreciation exp. of Rs.7,400 29,400
Operating Profit 6,200
Other expenses/income:
Interest expenses paid (4,600)
Interest income received 1,200
Gain on sale of investments 2,400
Loss on sale of plant (600) (1,600)
4,600
Income tax (1,400)
Profit After tax 3,200
Comparative Balance Sheet
31.03.2004 31.03.2003 31.03.2004 31.03.2003
Liabilities Assets
Rs. Rs. Rs. Rs.
Share capital 93,000 63,000 Plant 1,43,000 1,01,000
Reserves & Surplus 28,000 26,400 Less: Accumulated Dep. 20,600 13,600
Bonds 59,000 49,000 1,22,400 87,400
Current Liabilities: Investments 23,000 25,400
Accounts payable 10,000 8,600 Current assets:
Liabilities 2,400 1,800 Inventory 28,800 22,000
Income-tax payable 600 1,000 Debtors 9,400 11,000
Cash 9,200 3,000
Prepaid expenses 200 1,000
1,93,000 1,49,800 1,93,000 1,49,800
Analysis of selected accounts and transaction during 2003-04
i. Purchased investments for Rs.15,600.
ii. Sold investments for Rs.20,400. These investments cost Rs.18,000.
iii. Purchased plant for Rs.24,000.
iv. Sold plant that cost Rs.2,000 with accumulated depreciation of Rs.400 for Rs.1,000.
v. Issued Rs.20,000 worth Bonds at face value in exchange for plant purchased on 31st March, 2004.
vi. On maturity, bonds of Rs.10,000 repaid at face value.
vii. Issued 3,000 shares of Rs.10 each.
viii. Paid cash dividend Rs.1,600
Prepare cash flow statement as per AS-3 (indirect method), and direct method.
Solution 7:
Cash Flow Statement for the year ended 31.3.2004
Particulars Rs. Rs.
A. Cash from operating activities (Indirect Method)
1. Profit before tax and extra ordinary items 4,600
2. Adjustments for
a. Depreciation 7,400
b. Loss on sale of Plant 600
c. Less: Gain on Sale of Investments (2,400)
d. Less: Interest income received (1,200)
e. Interest expenses paid 4,600
Operating profit before working capital changes 13,600
Particulars Rs. Rs.
3. Adjustment for working capital changes
a. Increase in Inventory (6,800)
b. Decrease in debtors 1,600
c. Decrease in Prepaid Expenses 800
d. Increase in Accounts Payable 1,400
e. Increase in accrued liabilities 600
Cash generated from operations 11,200
Taxes Paid (1,800)
Cash flow before extraordinary items 9,400
Add/Less: Extraordinary Nil
Cash flow from operating activities 9,400
B. Cash flow from investing activities
1. Purchase of Plants (24,000)
2. Sale proceeds of plant 1,000
3. Purchase of investments (15,600)
4. Sale proceeds of investments 20,400
5. Int. income received 1,200
(17,000)
C. Cash flow from financing activities
1. Issue of shares 30,000
2. Repayment of funds (10,000)
3. Interest paid (4,600)
4. Dividend paid (1,600)
13,800
1. Reconciliation
Opening balance 3,000
Closing Balance 9,200
Increase 6,200

Indirect Method
WN-1:
Plant A/c
Dr. Cr.
Particulars Amount Particulars Amount
Rs. Rs.
To Balance b/d 87,400 By Bank (Sale) 1,000
” Bank 24,000 ” Profit & Loss a/c 600
” Bonds 20,000 ” Depreciation 7,400
” Balance c/d 1,22,400
1,31,400 1,31,400
Accumulated Depreciation a/c
Dr. Cr.
Particulars Amount Particulars Amount
Rs. Rs.
To Plant a/c 400 By Balance b/d 13,600
To Balance c/d 20,600 By Profit & Loss a/c 7,400
21,000 21,000

Tax a/c
Dr. Cr.
Particulars Amount Particulars Amount
Rs. Rs.
To Bank a/c 1,800 By Balance b/d 1,000
To Balance c/d 600 By Profit & Loss a/c 1,400
2,400 2,400
Direct Method
WN-1: Collection from Debtors
Debtors A/c
Dr. Cr.
Particulars Rs. Particulars Rs.
To Balance 11,000 By Bank (balance figure) 1,41,200
To Sales 1,39,600 By Balance 9,400
1,50,600 1,50,600
WN-2: Payment for Purchases
Dr. Creditors A/c Cr.

Particulars Rs. Particulars Rs.

To Bank (bal figure) 1,09,400 By Balance b/d 8,600


To Balance c/d 10,000 By Purchases 1,10,800

1,19,400 1,19,400

Note: Opening Stock + Purchases – Closing Stock = Cost of Goods sold.


22,000 + Purchases – 28,800 = 1,04,000
Purchases = 1,04,000 + 28,800–22,000 = 1,10,800
WN-3:

Expenses paid in Cash Rs.

Expd. From P & L a/c Excluding depreciation (29,400–7,400) 22,000


Less: Increases in accrued liabilities (Outstanding Expenses) (600)
Less: Decrease in prepaid Expenses (800)

20,600

Cash Flow Statement for the year ended 2004


Particulars Rs.
A. Cash flow from operating activities (Direct Method)
a. Collection from debtors (WN-1) 1,41,200
b. Less: Payment for Purchases (WN-2) (1,09,400)
c. Less: Payment for Expenses (WN-3) (20,600)
Cash generated from operations 11,200
d. Less: Taxes paid 1,800
Cash flow before extraordinary items 9,400
e. Less: Extraordinary items NIL
Cash flow from operating activities 9,400
Cash flow from investing activities (same as in the case of indirect (17,000)
method)
Cash flow from financing activities (same as in the case of indirect 13,800
method)
Increase in Cash & Cash equivalents 6,200