From the following Balance Sheet of Yogeta Ltd., prepare a Cash Flow Statement.
Balance Sheet of Yogeta Ltd.
| Particulars | Note No. | 31 March 2017 (₹) | 31 March 2016 (₹) |
|---|---|---|---|
| I. Equity and Liabilities | |||
| 1. Shareholders' Funds — a) Share capital | 1 | 4,00,000 | 2,00,000 |
| b) Reserve and surplus (Surplus) | 2,00,000 | 1,00,000 | |
| 2. Non-current Liabilities — Long-term borrowings | 2 | 1,50,000 | 2,20,000 |
| 3. Current Liabilities — a) Short-term borrowings (Bank overdraft) | 1,00,000 | — | |
| b) Trade payables | 70,000 | 50,000 | |
| c) Short-term provision (Provision for taxation) | 50,000 | 30,000 | |
| Total | 9,70,000 | 6,00,000 | |
| II. Assets | |||
| 1. Non-current assets — Fixed assets: Tangible | 7,00,000 | 4,00,000 | |
| 2. Current assets — Inventories | 1,70,000 | 1,00,000 | |
| Trade Receivables | 1,00,000 | 50,000 | |
| Cash and cash equivalents | — | 50,000 | |
| Total | 9,70,000 | 6,00,000 |
Notes to Accounts
| Particulars | 31 March 2017 (₹) | 31 March 2016 (₹) |
|---|---|---|
| 1. Share capital: Equity share capital | 3,00,000 | 2,00,000 |
| Preference share capital | 1,00,000 | — |
| 2. Long-term borrowings: 8% Long-term loan | — | 2,00,000 |
| 9% Loan from Rahul | 1,50,000 | 20,000 |
Additional Information: Net Profit for the year, after charging ₹50,000 as depreciation, was ₹1,50,000. Dividend paid on shares was ₹50,000. Tax provision created during the year amounted to ₹60,000. The 8% loan was repaid on March 31, 2017 and an additional 9% loan of ₹1,30,000 was obtained from Rahul on April 01, 2016.
You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.
Start your 14-day free trial to unlock the full solution →Net cash from Operating Activities ₹1,20,000; used in Investing Activities ₹(3,50,000); from Financing Activities ₹1,80,000; net decrease in cash ₹(50,000), reconciling opening cash ₹50,000 to closing cash ₹Nil (bank overdraft ₹1,00,000 shown as a financing inflow).
Concept: Cash Flow Statement under AS-3 (Revised)
A Cash Flow Statement classifies cash movements into three activities:
Operating Activities capture cash generated from the entity's principal revenue-producing activities. We start with net profit (after tax and depreciation) and adjust for non-cash charges (depreciation added back), changes in working capital (increase in current assets reduces cash; increase in current liabilities adds cash), and actual tax paid (provision created minus actual payment).
Investing Activities record cash flows from acquisition and disposal of long-term assets and investments. Purchase of fixed assets is a cash outflow; proceeds from sale are inflow.
Financing Activities include cash from or to owners and lenders: issue of shares, borrowing/repayment of loans, and dividends paid.
The key treatment rules:
- Depreciation is added back to profit (it reduced profit but involved no cash outflow).
- Tax paid = Opening provision + Tax charged during the year − Closing provision.
- Purchase of fixed assets = Closing tangible assets − Opening tangible assets + Depreciation (since depreciation reduced the book value).
- Proceeds from issue of shares = Increase in share capital.
- Proceeds from borrowings and Repayment of borrowings are shown separately (not netted).
- Dividends paid is a financing outflow.
- Change in cash and cash equivalents = Closing cash − Opening cash; a bank overdraft is negative cash.
Solution: Cash Flow Statement of Yogeta Ltd. for the year ended 31st March 2017
Cash Flow Statement
| Particulars | Amount (₹) | Amount (₹) |
|---|---|---|
| A. Cash Flow from Operating Activities | ||
| Net Profit before Tax and Extraordinary Items (W.N. 1) | 2,10,000 | |
| Adjustments for: | ||
| Depreciation on Tangible Assets | 50,000 | |
| Operating Profit before Working Capital Changes | 2,60,000 | |
| Adjustments for Working Capital Changes: | ||
| (Increase) in Inventories | (70,000) | |
| (Increase) in Trade Receivables | (50,000) | |
| Increase in Trade Payables | 20,000 | |
| (1,00,000) | ||
| Cash Generated from Operations | 1,60,000 | |
| Less: Income Tax Paid (W.N. 2) | (40,000) | |
| Net Cash from Operating Activities | 1,20,000 | |
| B. Cash Flow from Investing Activities | ||
| Purchase of Tangible Fixed Assets (W.N. 3) | (3,50,000) | |
| Net Cash used in Investing Activities | (3,50,000) | |
| C. Cash Flow from Financing Activities | ||
| Proceeds from Issue of Equity Share Capital (W.N. 4) | 1,00,000 | |
| Proceeds from Issue of Preference Share Capital (W.N. 5) | 1,00,000 | |
| Proceeds from 9% Loan from Rahul (W.N. 6) | 1,30,000 | |
| Repayment of 8% Long-term Loan (W.N. 7) | (2,00,000) | |
| Dividends Paid | (50,000) | |
| Increase in Bank Overdraft (W.N. 8) | 1,00,000 | |
| Net Cash from Financing Activities | 1,80,000 | |
| Net Decrease in Cash and Cash Equivalents (A + B + C) | (50,000) | |
| Add: Cash and Cash Equivalents at the beginning (1.4.2016) | 50,000 | |
| Cash and Cash Equivalents at the end (31.3.2017) | Nil |
Working Notes
W.N. 1: Net Profit before Tax
Given: Net Profit after tax = ₹1,50,000.
Tax provision created during the year = ₹60,000.
Net Profit before Tax = ₹1,50,000 + ₹60,000 = ₹2,10,000.
W.N. 2: Income Tax Paid
| Particulars | Amount (₹) |
|---|---|
| Opening Provision for Taxation (1.4.2016) | 30,000 |
| Add: Tax Provision created during the year | 60,000 |
| 90,000 | |
| Less: Closing Provision for Taxation (31.3.2017) | (50,000) |
| Tax Paid during the year | 40,000 |
W.N. 3: Purchase of Tangible Fixed Assets
| Particulars | Amount (₹) |
|---|---|
| Closing Tangible Assets (31.3.2017) | 7,00,000 |
| Add: Depreciation charged during the year | 50,000 |
| 7,50,000 | |
| Less: Opening Tangible Assets (1.4.2016) | (4,00,000) |
| Purchase of Tangible Assets | 3,50,000 |
W.N. 4: Proceeds from Issue of Equity Share Capital
Equity Share Capital increased from ₹2,00,000 to ₹3,00,000.
Proceeds = ₹3,00,000 − ₹2,00,000 = ₹1,00,000.
W.N. 5: Proceeds from Issue of Preference Share Capital
Preference Share Capital increased from ₹Nil to ₹1,00,000.
Proceeds = ₹1,00,000.
W.N. 6: Proceeds from 9% Loan from Rahul
9% Loan from Rahul increased from ₹20,000 to ₹1,50,000.
Additional loan obtained = ₹1,50,000 − ₹20,000 = ₹1,30,000.
(The additional information confirms this: ₹1,30,000 obtained on 1.4.2016.)
W.N. 7: Repayment of 8% Long-term Loan
8% Long-term Loan decreased from ₹2,00,000 to ₹Nil.
Repayment = ₹2,00,000.
(The additional information confirms this was repaid on 31.3.2017.)
W.N. 8: Bank Overdraft
Bank Overdraft (a short-term borrowing, treated as a financing activity when it represents a loan rather than part of cash management) increased from ₹Nil to ₹1,00,000.
Increase = ₹1,00,000. …
Unlock everything free for 14 days
- Full step-by-step solutions
- Concept-first explanations
- Methods, shortcuts & mistakes
- PYQ mapping + timed mock tests
Full access for 14 days. No credit card required.