Cash Flow Statement

ABC ltd. provides you with this Profit and loss account and balance sheet for
the two years. The directors are interested in tracking down the activities
that generate cash inflows during the year ending March 31, 2017. prepare
a cash flow statement based upon the following details:

Balance Sheet
Assets 2017 2018 Liabilities 2017 2018
Fixed assets 4,00,000 5,00,000 Equity 2,50,000 5,00,000
Investments 2,00,000 Nil Preference 50,000 20,000
shares

Machinery 1,50,000 3,00,000 Debentures 1,00,000 40,000

Cash in hand 41,000 2,00,000 Long term Nil 30,000
borrowings

Debtors 30,000 42,000 Net profit 1,20,000 1,39,000

Inventory 22,000 18,000 Reserves and 2,91,000 2,91,000
surplus

Creditors 32,000 40,000

Total 8,43,000 10,60,000 Total 8,43,000 10,60,000
 Profit and loss Account

Expenses Amount Revenue Amount

purchases 15,000 sales 85,000

salary and wages 5,000 interest received 15,000

income tax 1,000 dividend income 10,000

debentures interest 6,000

dividend (preference) 3,000

dividend (equity) 6,000

depreciation 55,000

Net profit/RE 19,000

Total 1,10,000 Total 1,10,000

Depreciation is provided @ 10%. New assets, if added, are assumed to be

purchased on the last date of financial year.
 Profit and loss Account

Particulars Amount Particulars Amount

purchases 15,000 sales 85,000

salary and wages 5,000 interest received 15,000

income tax 1,000 dividend income 10,000

debentures interest 6,000

dividend (preference) 3,000

dividend (equity) 6,000

depreciation 55,000

Net profit/RE 64000 19,000

Total
Total 1,10,000 1,10,000
 Amount Amount
A. Cash flow from operating activities
Net profit before indirect expenses and incomes 19,000
Add: Non cash and Non operating Expenses
Debentures interest 6,000
Dividend (Preference shares) 3,000
Dividend (Equity shares) 6,000
Depreciation 55,000 70,000
Less: Non operating Incomes
Interest received (15,000)
Dividend received (10,000) (25,000)
Net Profit before working capital change 64,000
Balance Sheet and Changes

Change
Assets 2011 2012 Change Liabilities 2011 2012

Fixed assets 4,00,000 5,00,000 1,00,000Equity 2,50,000 5,00,000 2,50,000

Preference
Investments 2,00,000 0 -2,00,000 50,000 20,000 -30,000
shares

Machinery 1,50,000 3,00,000 1,50,000Debentures 1,00,000 40,000 -60,000

Long term
Cash in hand 41,000 2,00,000 1,59,000 0 30,000 30,000
borrowings

Debtors 30,000 42,000 12,000Net profit 1,20,000 1,39,000 19,000

Reserves and
Inventory 22,000 18,000 -4,000 2,91,000 2,91,000 0
surplus

Creditors 32,000 40,000 8000

Total 8,43,000 10,60,000 2,17,000Total 8,43,000 10,60,000 2,17,000

 Amount Amount
A. Cash flow from operating activities
Net profit before indirect expenses and incomes 19,000
Add: Non cash and Non operating Expenses
Debentures interest 6,000
Dividend (Preference shares) 3,000
Dividend (Equity shares) 6,000
Depreciation 55,000 70,000
Less: Non operating Incomes
Interest received (15,000)
Dividend received (10,000) (25,000)
Net Profit before working capital change 64,000

Add: Decrease in current assets and Increase in current liabilities

Inventory 4,000

Creditors 8,000 12,000

Less: Increase in current assets and Decrease in current liabilities

Debtors (12,000) (12,000)

Net cash flow from Operating activities 64,000

Balance Sheet and Changes Investing Activities
Change
Assets 2011 2012 Change Liabilities 2011 2012

Fixed assets 4,00,000 5,00,000 1,00,000Equity 2,50,000 5,00,000 2,50,000

Preference
Investments 2,00,000 0 -2,00,000 50,000 20,000 -30,000
shares

Machinery 1,50,000 3,00,000 1,50,000Debentures 1,00,000 40,000 -60,000

Long term
Cash in hand 41,000 2,00,000 1,59,000 0 30,000 30,000
borrowings

Debtors 30,000 42,000 12,000Net profit 1,20,000 1,39,000 19,000

Reserves and
Inventory 22,000 18,000 -4,000 2,91,000 2,91,000 0
surplus

Creditors 32,000 40,000 8000

Total 8,43,000 10,60,000 2,17,000Total 8,43,000 10,60,000 2,17,000

 Working note 1 (Fixed assets)
Particulars Amount Particulars Amount
Opening balance 4,00,000 Depreciation @ 10% 40,000
Purchases (Outflow – 1,40,000 Closing balance 5,00,000
Assumed)
tal 5,40,000 tal 5,40,000

Working note 2 (Machinery)

Particulars Amount Particulars Amount

Opening balance 1,50,000 Depreciation @ 10% 15,000
Purchases (Outflow – 1,65,000 Closing balance 3,00,000
Assumed)
Total 3,15,000 Total 3,15,000
 Profit and loss Account

Particulars Amount Particulars Amount

purchases 15,000 sales 85,000

salary and wages 5,000 interest received 15,000

income tax 1,000 dividend income 10,000

debentures interest 6,000

dividend (preference) 3,000

dividend (equity) 6,000

depreciation 55,000

Net profit/RE 19,000

64000
Total
Total 1,10,000 1,10,000
 Amount Amount
B. Cash flow from investing activities
Inflow:
Dividend received 10,000
Interest received 15,000
Sale of investments 2,00,000 2,25,000
Outflow:
Purchase of Fixed assets (Working note 1) (1,40,000)
Purchase of Machinery (Working note 2) (1,65,000) (3,05,000)

Net cash flow from Investing activities (80,000)

Balance Sheet and Changes – Financing

Change
Assets 2011 2012 Change Liabilities 2011 2012

Fixed assets 4,00,000 5,00,000 1,00,000Equity 2,50,000 5,00,000 2,50,000

Preference
Investments 2,00,000 0 -2,00,000 50,000 20,000 -30,000
shares

Machinery 1,50,000 3,00,000 1,50,000Debentures 1,00,000 40,000 -60,000

Long term
Cash in hand 41,000 2,00,000 1,59,000 0 30,000 30,000
borrowings

Debtors 30,000 42,000 12,000Net profit 1,20,000 1,39,000 19,000

Reserves and
Inventory 22,000 18,000 -4,000 2,91,000 2,91,000 0
surplus

Creditors 32,000 40,000 8000

Total 8,43,000 10,60,000 2,17,000Total 8,43,000 10,60,000 2,17,000

 Profit and loss Account

Particulars Amount Particulars Amount

purchases 15,000 sales 85,000

salary and wages 5,000 interest received 15,000

income tax 1,000 dividend income 10,000

debentures interest 6,000

dividend (preference) 3,000

dividend (equity) 6,000

depreciation 55,000

Net profit 19,000

64000
Total
Total 1,10,000 1,10,000
 Amount Amount
C. Cash flow from financing activities
Inflow:
Issue of equity shares 2,50,000
Long term borrowing 30,000 2,80,000
Outflow:
Debentures redeemed (60,000)
Preference shares redeemed (30,000)
Debentures Interest (6,000)
Dividend paid (Preference shares) (3,000)
Dividend paid (Equity shares) (6,000) (1,05,000)

Net cash flow from Financing activities 1,75,000

 Amount Amount
A. Cash flow from operating activities
Net profit before indirect expenses and incomes 19,000
Add: Non cash and Non operating Expenses
Debentures interest 6,000
Dividend (Preference shares) 3,000
Dividend (Equity shares) 6,000
Depreciation 55,000 70,000
Less: Non operating Incomes
Interest received (15,000)
Dividend received (10,000) (25,000)
Net Profit before working capital change 64,000

Add: Decrease in current assets and Increase in current liabilities

Inventory 4,000

Creditors 8,000 12,000

Less: Increase in current assets and Decrease in current liabilities

Debtors (12,000) (12,000)

Net cash flow from Operating activities (A) 64,000

 Amount Amount
B. Cash flow from investing activities
Inflow:
Dividend received 10,000
Interest received 15,000
Sale of investments 2,00,000 2,25,000
Outflow:
Purchase of Fixed assets (Working note 1) (1,40,000)
Purchase of Machinery (Working note 2) (1,65,000) (3,05,000)

Net cash flow from Investing activities (B) (80,000)

 Amount Amount
C. Cash flow from financing activities
Inflow:
Issue of equity shares 2,50,000
Long term borrowing 30,000 2,80,000
Outflow:
Debentures redeemed (60,000)
Preference shares redeemed (30,000)
Debentures Interest (6,000)
Dividend paid (Preference shares) (3,000)
Dividend paid (Equity shares) (6,000) (1,05,000)

Net cash flow from Investing activities (C) 1,75,000

Change in Cash (A +B+ C) 159000

Add: Opening Cash Balance 41000
Closing Cash Balance 200000
 Profit and loss Account

Particulars Amount Particulars Amount

purchases 15,000 sales 85,000

salary and wages 5,000 interest received 15,000

income tax 1,000 dividend income 10,000

debentures interest 6,000

dividend (preference) 3,000

dividend (equity) 6,000

depreciation 55,000

Net profit 19,000

64000
Total
Total 1,10,000 1,10,000