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Balance Sheet As On January 31, 2008 & 2007 Liabilities 2008 2007

Welspun Company reported a net loss of Rs. 18,000 for the year ended January 31, 2008 according to their income statement. Their balance sheet shows declining current assets and increasing long-term liabilities from 2007 to 2008. Specifically, cash and cash equivalents fell from Rs. 69,000 to Rs. 12,000. This document provides financial statements for Welspun Company and additional details to prepare an indirect cash flow statement analyzing the source of their cashflow problems over this period.

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Sai Deshpande
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74 views2 pages

Balance Sheet As On January 31, 2008 & 2007 Liabilities 2008 2007

Welspun Company reported a net loss of Rs. 18,000 for the year ended January 31, 2008 according to their income statement. Their balance sheet shows declining current assets and increasing long-term liabilities from 2007 to 2008. Specifically, cash and cash equivalents fell from Rs. 69,000 to Rs. 12,000. This document provides financial statements for Welspun Company and additional details to prepare an indirect cash flow statement analyzing the source of their cashflow problems over this period.

Uploaded by

Sai Deshpande
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Cashflow problem:

Welspun Company’s Profit & Loss Account for the year ended January 31, 2008 and Balance
Sheet on January 31, 2008 and 2007 are as follows.

Amount Rs.
Sales 5,70,000
Add : Interest Income 2,000
Add: Gain on Sale of Investments 7,000
TOTAL INCOME 5,79,000
Less: Cost of Goods sold 4,45,000
Depreciation 89,000
Selling & Administration Expenses 46,000
Interest Expenses 14,000
Loss on Sale on Plant & Machinery 3,000
Profit before tax (18,000)
Tax 0
Net Profit (18,000)

Balance Sheet as on January 31, 2008 & 2007


Liabilities 2008 2007
Shareholders’ Funds :
Equity Share Capital 1,55,000 85,000
Retained Earnings 1,02,000 1,20,000
Total Shareholders’ Funds 2,57,000 2,05,000
Long Term Liabilities:
14 % Debentures 97,000 57,000
Unsecured Loans 1,81,000 1,91,000
Total Long Term Liabilities 2,78,000 2,48,000
Current Liabilities:
Bills Payable 6,000 9,000
Creditors 24,000 1,78,000
Income tax Payable 9,000 17,000
Total Current Liabilities 39,000 2,04,000
Total Liabilities 5,74,000 6,57,000
Assets
Fixed Assets:
Plant & Machinery at Cost 7,20,000 5,40,000
Less: Accumulated Depreciation 3,62,000 3,05,000
Total Fixed Assets (net) 3,58,000 2,35,000
Investments 18,000 66,000
Current Assets :
Inventories 1,51,000 1,19,000
Debtors 29,000 1,66,000
Prepaid expenses 6,000 2,000
Cash & Cash Equivalents 12,000 69,000
Total Current Assets 1,98,000 3,56,000
Total Assets 5,74,000 6,57,000
Additional information:

1. Sold machinery for Rs.10,000 (cost Rs.45,000 and accumulated depreciation of


Rs.32,000)
2. Part of the machinery was purchased in exchange for secured debentures - Rs.75,000.
3. Purchased investments for cash.Rs.30,000
4. Sold investments for cash Rs.85,000 (cost Rs.78,000)
5. Converted secured debentures to equity shares Rs.20,000.
6. Redeemed secured debentures Rs,15,000.
Prepare the cash flow statement using Indirect Method

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