Taking into account the following additional information, your are required to prepare funds flow statement and statement change in working capital.

Following are the balance sheets of a limited company as on 31^st December, 2009 and 2010.

Liabilities	2009 Rs.	2010 Rs.	Assets	2009 Rs.	2010 Rs.
Share capital Reserves P & L account Bank loan (Long-term) Creditors Bills payable	54,000 13,000 8,600 25,000 28,000 8,000	74,000 15,500 8,800 -- 24,000 8,500	Goodwill Buildings Plant Stock Debtors Cash Bank	3,000 50,950 35,000 25,500 22,000 150 --	2,520 48,000 43,000 18,800 16,200 180 2,100
Total	1,36,600	1,30,800		1,36,600	1,30,800

Taking into account the following additional information, your are required to prepare funds flow statement and statement change in working capital.

(a)     Dividend paid was Rs. 6,000.

(b)     Rs. 3,600 was written off as depreciation on plant and Rs. 2,950 on buildings.

(c)     Profit on sale of plant was Rs. 3,000.

Ans:        Working Notes

 Profit and loss adjustment account

To transfer to general reserve        (15500 – 13000)	2500	By bal b/d	8600
To Dividend	6000	By profit on sale of plant	3000
To goodwill write-off        (3000 -2520)	480	By funds from operation	12730
To Depreciation on plant	3600
To  depreciation on buildings	2950
To Bal C/d	8800
Total	24330		24330

Plant account

To bal b/d	35000	By depreciation	3600
To profit on sale	3000	By bank (sales)	--
To bank (purchase)	8600	By bal c/d	43000
Total	46600		46600

Building account

To bal b/d	50950	By depreciation	2950
		By bal c/d	49000
Total	50950		50950

Funds flow statement for the year 31^st Dec 2010

Sources		Application
Issue of shares   (74000 – 54000)	20,000	Plant purchase	8600
Funds from operation	12,730	Dividend	6000
		Long term loan repaid	25000
Decrease in working capital	6870
Total	39,600		39,600

Statements showing changes in working capital for the year 2010

	2009	2010	Increase	Decrease
Current assets
Debts	22000	16200	--	6700
Stock	25500	18800	--	5800
Cash	150	180	30	--
Bank	--	2100	2100	--
Current liabilities
Creditors	28000	24000	4000
Bills payable	8000	8500		500
Total			6130	13000

Decrease in working capital = 6870