Question:Following are the summarized balance sheets of Growell Ltd., as on 31st March, 1998 and 1999.

1998 1999 1998 1999Share Capital 200,000 250,000 Land & Building 200,000 190,000 General reserve 50,000 60,000 Machinery 150,000 169,000 P L A/c 30,500 30,600 Stock 100,000 74,000 Bank Loan 70,000 - Debtors 80,000 64,200 Creditors 150,000 135,200 Cash 500 800 Provision for Taxation 30,000 35,000 Bank - 7,800

Goodwill - 5,000 530,500 510,800 530,500 510,800

Additional Information:During the year ended 31st March, 2004(i) Dividend of Rs. 23,000 was paid.(ii) Assets of another company were purchased for a consideration of Rs. 50,000 payable in shares.The following assets were purchased:Stock: Rs. 20,000; Machinery Rs. 25,000(iii) Machinery was further purchased for Rs. 8,000(iv) Depreciation written off on machinery Rs. 12,000; and(v) Income-tax provided during the year Rs. 33,000;(vi) loss on sale of machinery Rs. 200 was written off to general reserve.You are required to prepare the Statement of Cash flow.

Solution:

By Balance b/d 200,000 By Machinery 25,000 By Stock 20,000

To Balance c/d 250,000 By Goodwill 5,000 250,000 250,000

To Machinery 200 By Balance b/d 50,000 To Balance c/d 60,000 By P L A/c 10,200

60,200 60,200

To Bank A/c 28,000 By Balance b/d 30,000 To Balance c/d 35,000 By P L A/c 33,000

63,000 63,000

To Balance b/d 150,000 By Depreciation 12,000 To Share Capital 25,000 By General Res. 200 To Bank 8,000 By Bank 1,800

By Balance c/d 169,000 183,000 183,000

To Proposed Dividend 23,000 By Balance b/d 30,500 To General res. 10,200 By Operationg ProfitTo Depreciation 22,000 before working capitalTo provision for Tax 33,000 changes 88,300

Adjusted Profit & Loss Account

Share Capital Account

General Reserve Account

Provision for Taxation

Machinery

To Balance c/d 30,600 118,800 118,800

Note: Depreciation on Land & BuildingOpening Balance 200,000 Less: Closing balance 190,000

10,000

Particulars Rs. Rs.

Cash flow from Operating Activities:Operating profit before working capital changes. 88,300

Add: Decrease in Stock [100000-(74000-20000)] 46,000 Add: Decrease in Debtors 15,800 Less: Decrease in Creditors 14,800-

Cash generated from operations 135,300 Less: Income taxes PAID 28,000

Net cash from operating activities 107,300

Cash flows from investing activities:Purchase of Machinery 8,000- Proceeds from Sale of Machinery 1,800 6,200- Net cash from investing activities

Cash flows from financing activitiesDividends paid 23,000- Repayment of Bank Loan 70,000- Net cash used in financing activities 93,000-

Net increase in cash and cash equivalents 8,100 Add: Cash and cash equivalents at beginning of period 500

Cash and cash equivalents at end of period (800 + 7800) 8,600

Growell Ltd.Cash Flow Statement ( As per AS 3: Indirect Method)

for the year ended 31st March, 1999.