From the following Balance sheets of Sriramco, prepare
(a) Statement of Changes in Working Capital, and (b) Funds Flow Statement: Balance Sheet of Sriramco as on 31st December…
| Assets Good will Land and Buildings Plant Investments Book Debts Stock Cash in hand and at Bank Preliminary Expenses Liabilities Share capital Equity Share Capital 10% Red. Pref. Share Capital Capital Reserve General Reserve p. and L. Account Proposed Dividend Sundry Creditors Provision for Taxation | 2000 | 2001 |
| Rs. 90,000 2,80,000 1,00,000 30,000 1,80,000 80,000 40,000 20,000 | Rs. 80,000 2,00,000 2,00,000 40,000 2,10,000 1,20,000 45,000 10,000 | |
| 8,20,000 | 9,05,000 | |
| 4,00,000 2,00,000 - 60,000 30,000 60,000 30,000 40,000 | 5,00,000 1,00,000 30,000 80,000 45,000 60,000 45,000 45,000 | |
| | 8,20,000 | 8,20,000 |
The following additional information is also available
(a) A machine has been sold for Rs. 40,000 whose written down value was Rs. 36,000Deprteciation of Rs.15,000 has been charged on plant in 2001.
(b) A piece of land has been sold out in 2001 and the profit on the sale has been credited capital reserve;
(c) An interim dividend of Rs.30,000 has been paid in 2001;
(d) Income tax paid during 2001 amounts to Rs. 45,000;
(e) Preferences shares were redeemed at 5% premium.
Ans.
(A) Funds from Operation calculation
| Increase in P & L | 15000 |
| Increase in G.R. Balance | 20000 |
| Less: Profit on | 4000 |
| Add: Depreciation Provided | 15000 |
| Add: Interim Dividend | 30000 |
| Add: Provision for Dividend | 60000 |
| Add: Provision for Taxation | 50000 |
| Less: Redemption Premium on Preferences shares (100000x5%) | 5000 |
| Add: Preliminary expenses written off | 10000 |
| Add: Goodwill Written off | 10000 |
| Funds from operations | 201000 |
(B) Statement Showing Changes in Working Capital
| | Increase in W/C | Decrease in W/C |
| Increase in Book debts | 30000 | |
| Increase in stock | 40000 | |
| Increase in Cash and Bank | 5000 | |
| Increase in Sundry creditors | | 15000 |
| | 75000 | 15000 |
| Net Increase in Working Capital | | 60000 |
| | 75000 | 75000 |
(C) Funds Flow Statement Calculation
Sources:
| Funds from operations | 201000 |
| | 40000 |
| | 110000 |
| Issue of equity share capital | 100000 |
| Total | 451000 |
Applications
| Net Increase in working capital | 60000 |
| Dividend of 2000 paid | 60000 |
| Interim Dividend paid | 30000 |
| Income Tax Paid | 45000 |
| Redemption of Preferences Shares (100000+5000) | 105000 |
| Purchase of plant (100000-36000-15000) = 49000 less cl. Value Rs.2 lakh | 151000 |
| Total | 451000 |
Working Note:
Provision for Taxation
| To Bank | 45000 | Opening | 40000 |
| | | Provision of yeas | 50000 |
| closing | 45000 | | |
| | 90000 | | 90000 |
Plant A/C
| To Opening | 100000 | By Disposal a/c | 36000 |
| To Bank (Purchases) | 151000 | By Depreciation | 15000 |
| closing | | By Closing | 200000 |
| | 251000 | | 251000 |
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