CASH FLOW STATEMENT ANALYSIS [Publish Date]

Cash flow Statement

Assignment

By- Ananta Vishain

PGDM-IB
Roll No. 21IB307
 CASH FLOW STATEMENT ANALYSIS [Publish Date]

Q1.Following are the balance sheets of a Vijay & son:

Liabilities 1‐1‐05 31‐12‐05 Assets 1‐1‐05 31‐12‐05
Creditors 36,000 41,000 Cash 4,000 3,600
Loan from Partner ‐ 20,000 Debtor 35,000 38,400
Loan from Bank 30,000 25,000 Stock 25,000 22,000
Capital 1,48,000 1,49,000 Land 20,000 30,000
Building 50,000 55,000
Machinery 80,000 86,000
2,14,000 2,35,000 2,14,000 2,35,000

During the year Rs. 26,000 paid as dividend. The provision made for depreciation against
machinery as on 1.1.05 was Rs. 27,000 and on 31.12.05 Rs 36,000.
Prepare a cash flow statement.
Solution:
Machinery Account
Particulars Rs Particulars Rs
To Balance b/d 80,000 By Prov. for depreciation 36,000
To Prov. for depreciation 27,000 By Balance c/d 86,000
To Bank (purchase) ? 15,000

1,22,000 1,22,000
 Cash flow statement for the year ended 31.12.2005

Particular Rs. Rs.

1.Cash flows from operating activities:
Net profit before tax 27,000
Adjustment for dep. 9,000

Inc. in current liabilities 36,000

Inc. in debtor 5,000
Decrease in stock (3,400)
3,000
Net cash from operating activities 40,600

2. Cash flows from investing activities

Purchase of land (10,000)
Purchase of building. (5,000)
Purchase of machinery (15,000)

Net cash from investing activities (30,000)

3. Cash flows from financing activities: 20,000
Loan (5,000)
Repayment of bank loan (26,000
Payment of Dividends )
(11,000)
Net cash from financing activities
Net Cash Flow from all activities (A +B + C) (400)
Add: opening cash balance 4,000
Closing cash balance 3,600

W. N.
Net profit before tax.
Capital (1.1.05) 1,48,000
Capital (31.12.05) 1,49,000
Diff. 1,000
Add. Dividends 26,000
27,000
 Q2.
The summarized balance sheet of Bhadresh Ltd. as on 31.12.05 and 31.12.2006 are as
follows:

Liabilities 2005 2006 Assets 2005 2006

Share capital 4,50,000 4,50,000 Fixed asset 4,00,000 3,20,000

General Reserve 3,00,000 3,10,000 Investment 50,000 60,000
P & l a/c 56,000 68,000 Stock 2,40,000 2,10,000
Creditors 1,68,000 1,34,000 Debtor 2,10,000 4,55,000
Tax provision 75,000 10,000 Bank 1,49,000 1,97,000
Mortgage loan ‐ 2,70,000

10,49,000 12,42,000 10,49,000 12,42,000

Additional Details:
1. Investment costing Rs. 8,000 were sold for Rs. 8,500
2. Tax provision made during the year was Rs. 9,000
3. During the year part of fixed assets costing Rs 10,000 was sold for Rs 12,000 and
the profit was included in P & L A/c. You are required to prepare cash flow
statement for 2006.
Solution:
Cash flow statement for the year ended 31.12.2006
Particular Rs. Rs.

1.Cash flows from operating activities: 31,000

Net profit before tax (Rs. 28,500 in case Profit on sale
on Investment & Fixed Asset not considered)
Adjustment for: 70,000
Dep. (500)
Profit on sale of investment (2,000)
Profit on sale of Fixed assets 30,000
Dec. in stock (34,000)
Dec. in creditor (2,45,000)
Inc. in debtor (74,000)
Income tax paid

Net cash from operating activities (2,24,500)

2. Cash flows from investing activities:
Investment purchased (18,000)
Sale of investment 8,500
Sale of Fixed assets 12,000
Net cash from investing activities 2,500
3.Cash flows from financing activities:
Mortgage loan taken 2,70,000

Net Cash Flow from all activities (A + B + C) 48,000

Add: opening cash balance 1,49,000

Closing cash balance 1,97,000

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Q3.
Prepare cash flow statement of Satyam ltd. From the following:
Liabilities 1.1.06 31.12.06 Assets 1.1.06 31.12.06

Share capital 1,00,000 ‐

‐ 4,00,000 Goodwill 20,000
8% debenture
60,000 2,00,000 Machinery 1,25,000 4,75,000
Retained earning
40,000 90,000 Stock 20,000 80,000
Creditors
20,000 1,00,000 Debtor 30,000 1,00,000
Bills payable
30,000 40,000 Bank 50,000 1,50,000
Tax provision
40,000 Cash 25,000 45,000
2,50000 8,70,000 2,50,000 8,70,000

Additional Details:
1. During 2006 the business of a sole trader was purchased by issuing share for Rs.
2,00,000. The assets acquired from him were:
Goodwill Rs. 20,000, machinery Rs. 1,00,000 , stock Rs. 50,000 and Debtors Rs.
30,000
CASH FLOW STATEMENT
2. Provision ANALYSIS
for tax charged in 2006 was Rs. 35,000 8
3. The debenture was issued at a premium of 5% which is included in the
retained earnings.
4. Depreciation charged on machinery was Rs.30,000.

Solution: Cash flow statement for the year ended 31.12.2006

Particular Rs Rs

1.Cash flows from operating activities:

Net profit before tax 55,000
Adjustment for:
Dep. On machinery 30,000
Inc.. in creditor 60,000
Inc.. in bills payable 20,000
Inc.in stock (10,000)
Inc.. in debtor (40,000)
Income tax paid (25,000)
Net cash from operating activities 90,000

2. Cash flows from investing activities:

Machinery purchased (2,80,000)

Net cash from investing activities (2,80,000)

3.Cash flows from financing activities
Issue of shares 1,00,000
Issue of debenture 2,10,000
Cash flows from financing activities 3,10,000
Net inc. in cash equivalents 1,20,000
Add: opening cash balance 75,000
Closing cash balance 1,95,000

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Q4.The summarized balance sheet of 0
Jay Ltd as on 31.12.06 and 0
31.12.2007 are as follows: 1,
Liabilities 2006 20
2007 Assets 0
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After taking the following information in to account, prepare a cash flow statement for
the year ending 31.12.2007
1. The profit for 2006‐2007 was Rs.8,600 against this had been charged Dep. Rs. 3,050
and increase in provision for doubtful debt Rs.200
2. Income tax Rs.18,000 was paid during the year charged against the provision and in
addition Rs.20,000 was charged against profit and carried to the provision.
3. An interim dividend Of Rs.5,000 was paid in January 2007
4. Additional plan was purchased in September 2006 for Rs.5,000
st
5. Investments (cost Rs.5,000) were sold 2007 for Rs. 4800 and on 1 march 2007
another investment was made for Rs. 6,250.
Solution:
Cash flow statement for the year ended 31.12.2007
Particular Rs. Rs.

1.Cash flows from operating activities:

Net profit before tax 28,800
Adjustment for:
Depreciation 3,050
Inc. in provision for d/d 200
Dec. in stock 2,000
Dec. in creditor (3,370)
Inc. in debtor (230)
Income tax paid (18,000)
Net cash from operating activities 12,450

2. Cash flows from investing activities:

Investment purchased
(6,250)
Sale of investment
4,800
Plant purchased
(5,000)

Net cash from investing activities (6,450)

3.Cash flows from financing activities

Payment of interim dividend (5,000)
Net inc. in cash equivalents 1,000

Add: opening cash balance 8,000

Closing cash balance 9,000
 Adjusted profit and loss A/c
Particulars Rs Particulars Rs
To Provision for tax 20,000 By profit 28,800
To General reserve 3,600
To Loss on sale of Invest. 200
To interim dividend 5,000
28,800 28,800
Provision for tax A/c
Particulars Rs Particulars Rs
To Bank (tax paid ) 18,000 By Balance b/d 19,000
To Balance c/d 21,000 By P & L A/c. 20,000
(provision)
39,000 39,000

Q5.The Balance Sheets of a firm as on 31st December 2008 and 2009 are given below:
Liabilities 2008 2009 Assets 2008 2009
Share Capital 1,00,000 1,60,000 Fixed Assets ‐ Cost 1,52,000 2,00,000
Retained Earnings Inventory 93,400 89,200
Accumulated 70,250 85,300
Debtors 30,800 21,100
Depreciation 60,000 40,000
12% Debenture 50,000 ‐ Prepaid expenses 3,950 3,000
Creditors 28,000 48,000 Bank 28,100 20,000
3,08,250 3,33,300 3,08,250 3,33,300

Additional Information:
1. Net profit is Rs. 27,050.
2. Depreciation charged Rs. 10,000.
3. Cash dividend declared during the period Rs. 12,000.
4. An addition to the building was made during the year at a cost of Rs. 78,000 and fully
depreciated equipment costing Rs. 30,000 was discarded as no salvage being
realized.
Prepare a Cash Flow Statement.
Solution:
Adjusted Profit & Loss Account
Particular Amount Particular Amount
To Prov. for depreciation 10,000 By Balance b/d 70,250
To Dividend 12,000
To Balance c/d 85,300 By Adj. Profit 37,050
1,07,300 1,07,300
 Fixed Assets Account
Particular Amount Particular Amount
To Balance b/d 1,52,000 By Accumulated Dep. 30,000
To Bank 78,000 By Balance c/d 2,00,000

2,30,000 2,30,000

Accumulated Depreciation Account

Particular Amount Particular Amount
To Fixed Assets 30,000 By Balance b/d 60,000
To Balance c/f 40,000 By Profit & Loss A/c. 10,000

70,000 70,000

Cash flow statement for the year ending on 31.12.09 (As per A. S. ‐ 3)
Particulars Amount Amount
Rs. Rs.
(1) Cash Flow from Operating Activities:
37,050
Profit before tax (after non‐cash & extraordinary items)
Add/Less: Changes in Working Capital
- Dec. in Inventory 4,200
- Decrease in Debtors 9,700
- Increase in Creditors 20,000
- Decrease in pre‐paid expenses 950 34,850
Cash flows from operating activities 71,900
Less: Tax Paid Nil
NET CASH FLOW FROM OPERATING ACTIVITES (A) 71,900
(2) Cash Flow from Investing Activities:
- Purchase of Building (78,000)
NET CASH FLOW FROM INVESTING ACTIVITES (B) (78,000)
(3) Cash Flow from Financing Activities:
- Issued Equity Shares 60,000
- Dividend paid (12,000)
- Redemption of debenture (50,000)
NET CASH FLOW FROM FINANCING ACTIVITIES (C) (2,000)
NET CASH FLOW FROM ALL ACTIVITES (A+B+C) (8,100)
Add: Opening Cash and Bank Balance 28,100
Closing Cash and Bank Balance 20,000
THA
NK
YOU!