SUMS ON FUNDS FLOW STATEMENT

Question - 1

Liabilities 31/03/2012 31/03/2013 Assets 31/03/2012 31/03/2013

Equity Share Capital 150000 200000 Land & Building 80000 100000

6% Preference Shares 100000 120000 Plant 75000 60000

9% Debentures 100000 80000 Stock 100000 130000

General Reserve 50000 70000 Debtors 80000 120000

Profit & Loss A/c 60000 65000 Bills Receivables 60000 25000

Creditors 25000 35000 Cash in Hand 75000 100000

Bills Payable 10000 4000 Cash at Bank 25000 39000

Total 495000 574000 Total 495000 574000

Additional Information
1. Depreciation Charged on Building is Rs.10,000/- and on Plant Rs.5,000/-

You are required to prepare funds flow statement

SOLUTION

Statement Showing Changes in Working Capital

Increase in Decrease in
Particulars 31/03/2012 31/03/2013
Working Capital Working Capital

A] CURRENT ASSETS

Stock 100000 130000 30000 ---

Debtors 80000 120000 40000 ---

Bills Receivables 60000 25000 --- 35000

Cash in Hand 75000 100000 25000 ---

Cash at Bank 25000 39000 14000 ---

B] CURRENT LIABILITIES

Creditors 25000 35000 --- 10000

Bills Payable 10000 4000 6000 ---

TOTAL 115000 45000

Net Increase in Working Capital = 115000 - 45000

Net Increase in Working Capital = 70,000/-

 Equity Share Capital A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
By Balance b/d 150000
By Bank 50000
(Balancing fig.)

To Balance c/d 200000

200000 200000

6% Preference Share Capital A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
By Balance b/d 100000
By Bank 20000
(Balancing fig.)

To Balance c/d 120000

120000 120000

9% Debentures A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Bank 20000 By Balance b/d 100000
(Balancing fig.)

To Balance c/d 80000

100000 100000

General Reserve A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
By Balance b/d 50000
By Adjusted P&L A/c 20000
(Balancing fig.)
To Balance c/d 70000
100000 100000
 Land & Building A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Balance b/d 80000 By Adjusted P&L A/c 10000
To Bank 30000 (Depreciation)
(Purchase)
(Balancing Fig.)
By Balance c/d 100000
110000 110000

Plant A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Balance b/d 75000 By Adjusted P&L A/c 5000
(Depreciation)
By Bank 10000
(Sale)
(Balancing Fig.)

By Balance c/d 60000

75000 75000

Adjusted P&L A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Trasnfer to General Reserve 20000 By Balance b/d 60000
To Depreciation of Land & Building 10000 By Funds generated from operations 40000
To Depreciation on Plant 5000 (Balancing Fig.)

To Balance c/d 65000

100000 100000
 FUNDS FLOW STATEMENT

Dr. Cr.
Sources of Funds Amt. Application of Funds Amt.
1. Issue of Equity Shares 50000 1. Net Increase in Working Capital 70000
2. Issue of 6% Preference Shares 20000 2. Redemption of 9% Debentures 20000
3. Sale of Plant 10000 3. Purchase of Land & Building 30000
4. Funds from Operations 40000

120000 120000
Question - 2

Liabilities 31/03/2014 31/03/2015 Assets 31/03/2014 31/03/2015

Equity Share Capital 200000 250000 Goodwill 80000 60000

6% Preference Shares 100000 120000 Land & Building 80000 100000

9% Debentures 100000 70000 Machinery 75000 60000

General Reserve 30000 40000 Stock 100000 130000

Profit & Loss A/c 20000 25000 Debtors 80000 120000

Creditors 75000 60000 Bills Receivables 60000 32000

Bills Payable 12000 15000 Cash in Hand 75000 100000

Provision for Tax 16000 18000 Prelimanry Expenses 13000 10000

Proposed Dividend 10000 14000

Total 563000 612000 Total 563000 612000

Additional Information
1. Depreciation Charged on Building is Rs.15,000/- and on Machinery Rs.2,000/-
2. A part of machinery costing Rs. 5,000/- was sold for Rs. 8,000/-
3. Tax paid during the year Rs. 12000/-
4. Dividend paid during the year Rs. 8000/-
You are required to prepare funds flow statement
SOLUTION

Statement Showing Changes in Working Capital

Increase in Decrease in
Particulars 31/03/2014 31/03/2015
Working Capital Working Capital

A] CURRENT ASSETS

Stock 100000 130000 30000 ---

Debtors 80000 120000 40000 ---

Bills Receivables 60000 32000 --- 28000

Cash in Hand 75000 100000 25000 ---

B] CURRENT LIABILITIES

Creditors 75000 60000 15000 ---

Bills Payable 12000 15000 --- 3000

TOTAL 110000 31000

Net Increase in Working Capital = 110000 - 31000

Net Increase in Working Capital = 79,000/-

 Equity Share Capital A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
By Balance b/d 200000
By Bank 50000
(Balancing fig.)

To Balance c/d 250000

200000 200000

6% Preference Share Capital A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
By Balance b/d 100000
By Bank 20000
(Balancing fig.)

To Balance c/d 120000

120000 120000

9% Debentures A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Bank 30000 By Balance b/d 100000
(Balancing fig.)

To Balance c/d 70000

100000 100000

General Reserve A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
By Balance b/d 30000
By Adjusted P&L A/c 10000
(Balancing fig.)
To Balance c/d 40000
40000 40000
 Provision for Tax A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Bank 12000 By Balance b/d 16000
(Tax Paid) By Adjusted P&L A/c 14000
(Balancing fig.)
To Balance c/d 18000
30000 30000

Proposed Dividend A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Bank 8000 By Balance b/d 10000
(Dividend Paid) By Adjusted P&L A/c 12000
(Balancing fig.)
To Balance c/d 14000
22000 22000
 Goodwill A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Balance b/d 80000 By Adjusted P&L A/c 20000
(Written down)
(Balancing Fig.)

By Balance c/d 60000

80000 80000

Land & Building A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Balance b/d 80000 By Adjusted P&L A/c 15000
To Bank 35000 (Depreciation)
(Purchase)
(Balancing Fig.)
By Balance c/d 100000
115000 115000

Machinery A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Balance b/d 75000 By Adjusted P&L A/c 2000
To Adjusted P&L A/c (Depreciation)
(Profit on Sale) 3000 By Bank 8000
(Sale)
By Bank 8000
(Sale)
(Balancing Fig.)

By Balance c/d 60000

75000 75000
 Preliminary Expenses A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Balance b/d 13000 By Adjusted P&L A/c 3000
(Written down)
(Balancing Fig.)

By Balance c/d 10000

13000 13000

Adjusted P&L A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Trasnfer to General Reserve 10000 By Balance b/d 20000
To Provision for Tax 14000 By Profit on Sale of Machinery 3000
To Provision for Proposed Dividend 12000 By Funds generated from operations 78000
To Goodwill Written down 20000 (Balancing Fig.)
To Depreciation of Land & Building 15000
To Depreciation on Machinery 2000
To Preliminery ExpensesWritten down 3000

To Balance c/d 25000

101000 101000

FUNDS FLOW STATEMENT

Dr. Cr.
Sources of Funds Amt. Application of Funds Amt.
1. Issue of Equity Shares 50000 1. Net Increase in Working Capital 79000
2. Issue of 6% Preference Shares 20000 2. Redemption of 9% Debentures 30000
3. Sale of Part of Machinery 8000 3. Tax Paid 12000
4. Sale of Machinery 8000 4. Dividend Paid 8000
5. Funds from Operations 78000 5. Purchase of Land & Building 35000

164000 164000
Question - 3

BALANCE SHEET

Liabilities 31/03/2011 31/03/2012 Assets 31/03/2011 31/03/2012

Equity Share Capital 1000000 1000000 Fixed Assets 1100000 1640000

Profit & Loss A/c 80000 140000 Investment 240000 40000

14% Debentures -- 400000 Current Assets 160000 320000

Term Loan -- 100000

Current Liabilities 280000 260000

Provision for Tax 50000 60000

Proposed Dividend 90000 40000

TOTAL 1500000 2000000 TOTAL 1500000 2000000

Additional Information

1. Dividend Paid During the year Rs. 70,000/-

2. Provision for tax made during the year was Rs. 40,000/-

3. Deprecation Charged on Fixed Assets is Rs. 40,000/-

Prepare funds flow statement

SOLUTION

Statement Showing Changes in Working Capital

Increase in Decrease in
Particulars 31/03/2011 31/03/2012
Working Capital Working Capital

A] CURRENT ASSETS

Current Assets 160000 320000 160000 ---

B] CURRENT LIABILITIES

Current Liabilities 280000 260000 20000 ---

TOTAL 180000 0

Net Increase in Working Capital = 180000 - 0

Net Increase in Working Capital = 1,80,000/-

 Equity Share Capital A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
By Balance b/d 1000000

To Balance c/d 1000000

100000 1000000

14% Debentures A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
By Balance b/d 0
By Bank 400000
(Balancing fig.)
To Balance c/d 400000
400000 100000

Term Loan A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
By Balance b/d 0
By Bank 10000
(Balancing fig.)
To Balance c/d 100000
100000 100000

Provision for Tax A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Bank 30000 By Balance b/d 50000
(Tax Paid) By Adjusted P&L A/c 40000
(Balancing fig.)
To Balance c/d 60000
90000 90000
 Proposed Dividend A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Bank 70000 By Balance b/d 90000
(Dividend Paid) By Adjusted P&L A/c 20000
(Balancing fig.)
To Balance c/d 40000
110000 110000

Fixed Assets A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Balance b/d 1100000 By Adjusted P&L A/c 40000
To Bank 580000 (Depreciation)
(Purchase)
(Balancing Fig.)
By Balance c/d 1640000
1680000 1680000

Investment A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Balance b/d 240000 By Bank 200000
(Sale)

By Balance c/d 40000

240000 240000
 Adjusted P&L A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Provision for Tax 40000 By Balance b/d 80000
To Provision for Proposed Dividend 20000
To Depreciation on Fixed Assets 40000 By Funds generated from operations 160000
(Balancing Fig.)

To Balance c/d 140000

240000 240000

FUNDS FLOW STATEMENT

Dr. Cr.
Sources of Funds Amt. Application of Funds Amt.
1. Issue of 14% Debentures 400000 1. Net Increase in Working Capital 180000
2. Term Loan Received (Taken) 100000 2. Tax Paid 30000
3. Sale of Investments 200000 3. Dividend Paid 70000
4. Funds from Operations 160000 4. Purchase of Fixed Assets 580000

860000 860000
Question - 4

BALANCE SHEET

Liabilities 31/03/2009 31/03/2010 Assets 31/03/2009 31/03/2010

Equity Share Capital 1000000 1370000 Building 271000 250000

8% Preference Share Capital 90000 190000 Machinery 150000 180000

14% Debentures 100000 80000 Goodwill 100000 80000

Bank Loan 50000 20000 Investment 150000 250000

Profit & Loss A/c 60000 40000 Plant 100000 545000

Share Premium 1000 15000 Stock 120000 110000

Creditors 40000 70000 Bills Receivables 200000 180000

Bills Payable 100000 250000 Debtors 280000 310000

Provision for Tax 60000 40000 Prepaid Expenses 50000 75000

Proposed Dividend 20000 25000 Cash in Hand 100000 120000

TOTAL 1521000 2100000 TOTAL 1521000 2100000

Additional Information

1. Depreciation on Plant, Buliding & Machinery was Rs.30,000/-, Rs.60,000/-, Rs.10,000/-

2. A part of Machine worth Rs. 10,000/- and charged depereciation Rs. 3,000/- was sold for Rs. 5,000/-

Prepare funds flow statement

SOLUTION

Statement Showing Changes in Working Capital

Increase in Decrease in
Particulars 31/03/2009 31/03/2010
Working Capital Working Capital

A] CURRENT ASSETS

Stock 120000 110000 --- 10000

Bills Receivables 200000 180000 --- 20000

Debtors 280000 310000 30000 ---

Prepaid Expenses 50000 75000 25000 ---

Cash in Hand 100000 120000 20000 ---

B] CURRENT LIABILITIES

Creditors 40000 70000 --- 30000

Bills Payable 100000 250000 --- 150000

TOTAL 75000 210000

Net Decrease in Working Capital = 75000 - 210000/-

Net Decrease in Working Capital = 1,35,000/-

 Equity Share Capital A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
By Balance b/d 1000000
By Bank 370000
(Balancing fig.)

To Balance c/d 1370000

1370000 1370000

8% Preference Share Capital A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
By Balance b/d 90000
By Bank 100000
(Balancing fig.)

To Balance c/d 190000

190000 190000

14% Debentures A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Bank 20000 By Balance b/d 100000
(Balancing fig.)

To Balance c/d 80000

100000 100000

Bank Loan A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Bank 30000 By Balance b/d 50000
(Balancing fig.)

To Balance c/d 20000

50000 50000
 Share Premium A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
By Balance b/d 1000
To Bank 14000
(Balancing fig.)
To Balance c/d 15000
15000 15000

Provision for Tax A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Bank 60000 By Balance b/d 60000
(Tax Paid) By Adjusted P&L A/c 40000
(Balancing fig.)
To Balance c/d 40000
100000 100000

Proposed Dividend A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Bank 20000 By Balance b/d 20000
(Dividend Paid) By Adjusted P&L A/c 25000
(Balancing fig.)
To Balance c/d 25000
45000 45000
 Goodwill A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Balance b/d 100000 By Adjusted P&L A/c 20000
(Written down)
(Balancing Fig.)

By Balance c/d 80000

100000 100000

Building A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Balance b/d 271000 By Adjusted P&L A/c 60000
To Bank 39000 (Depreciation)
(Purchase)
(Balancing Fig.)
By Balance c/d 250000
310000 310000

Machinery A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Balance b/d 150000 By Adjusted P&L A/c 10000
To Bank 47000 (Depreciation)
(Purchase) By Bank (Sale) 5000
(Balancing Fig.) By Adjusted P&L A/c (Loss on Sale) 2000

By Balance c/d 180000

75000 75000
 Investment A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Balance b/d 150000
To Bank 100000
(Purchase)
(Balancing Fig.)
By Balance c/d 250000
250000 250000

Plant A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Balance b/d 100000 By Adjusted P&L A/c 30000
To Bank 475000 (Depreciation)
(Purchase)
(Balancing Fig.)
By Balance c/d 545000
250000 250000

Adjusted P&L A/c

Dr. Cr.
Particulars Amt. Particulars Amt.
To Provision for Tax 40000 By Balance b/d 60000
To Provision for Dividend (Proposed) 25000
To Depreciation on Building 60000 By Funds generated from operations 167000
To Depreciation on Machinery 10000 (Balancing Fig.)
To Goodwill written down 20000
To Depreciation on Plant 30000
To Loss on sale of Machinery 2000

To Balance c/d 40000

227000 227000
 FUNDS FLOW STATEMENT

Sources of Funds Amt. Application of Funds Amt.

1. Net Decrease in working Capital 135000 1. Redemption of 14% Debentures 20000
2. Issue of Equity Shares 370000 2. Repayment of Bank Loan 30000
3. Issue of 8% Preference Shares 100000 3. Tax Paid 60000
4. Share Premium Received 14000 4. Dividend Paid 20000
5. Sale of Machinery 5000 5. Purchase of Building 39000
5. Funds from Operations 167000 6. Purchase of Machinery 47000
7. Purchase of Investment 100000
8. Purchase of Plant 475000

791000 791000