From the following Balance Sheets, prepare Cash Flow Statement for the year ended 31st December, 2015:
BALANCE SHEETS OF M.S. LTD. as on 31st December, 2014 and 2015
| Liabilities | 31st Dec., 2014 (₹) | 31st Dec., 2015 (₹) | Assets | 31st Dec., 2014 (₹) | 31st Dec., 2015 (₹) |
|---|---|---|---|---|---|
| Share Capital | 55,000 | 70,000 | Goodwill | 30,000 | 20,000 |
| Profit and Loss A/c | 25,000 | 45,000 | Fixed Assets | 40,000 | 85,000 |
| Reserve | 15,000 | 20,000 | Investments (Long-term) | 12,200 | 11,500 |
| 9% Loan (Taken on 31.12.2015) | 25,000 | 50,000 | Inventories | 30,000 | 45,000 |
| Creditors | 16,000 | 20,000 | Debtors | 20,000 | 35,000 |
| Bills Payable | 4,000 | 7,500 | Bills Receivable | 4,000 | 10,000 |
| Cash and Bank | 3,800 | 6,000 | |||
| 1,40,000 | 2,12,500 | 1,40,000 | 2,12,500 |
Or
What is Cash Flow Statement? Mention the objectives of Cash Flow Statement.
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 →Operating activities 6,500 (net profit 25,000 + goodwill written off 10,000 = 35,000, less net working-capital increase 28,500); Investing (44,300) (fixed assets purchased 45,000, less investment sale 700); Financing +40,000 (shares 15,000 + 9% loan 25,000). Net increase 2,200 = closing 6,000 − opening 3,800.
This is a Cash Flow Statement problem from the WBCHSE HS (West Bengal Class-12) Accountancy syllabus, solved by the indirect method. The 9% loan was taken on 31.12.2015 (year-end), so no interest arises this year; goodwill fell 10,000 (written off); investments fell 700 (sold at book value).
Working note — Net profit = increase in P&L balance 20,000 + transfer to Reserve 5,000 = 25,000.
Cash Flow Statement for the year ended 31st December, 2015 (Indirect Method)
| Particulars | ₹ | ₹ |
|---|---|---|
| A. Cash Flow from Operating Activities | ||
| Net Profit (20,000 + 5,000 reserve) | 25,000 | |
| Add: Goodwill written off | 10,000 | |
| Operating Profit before Working Capital changes | 35,000 | |
| Add: Increase in Creditors | 4,000 | |
| Add: Increase in Bills Payable | 3,500 | |
| Less: Increase in Inventories | (15,000) | |
| Less: Increase in Debtors | (15,000) | |
| Less: Increase in Bills Receivable | (6,000) | |
| Net Cash from Operating Activities | 6,500 | |
| B. Cash Flow from Investing Activities | ||
| Purchase of Fixed Assets | (45,000) | |
| Sale of Long-term Investments | 700 | |
| Net Cash used in Investing Activities | (44,300) | |
| C. Cash Flow from Financing Activities | ||
| Issue of Share Capital | 15,000 | |
| 9% Loan raised | 25,000 | |
| Net Cash from Financing Activities | 40,000 | |
| Net Increase in Cash & Cash Equivalents (A+B+C) | 2,200 |
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.