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

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…

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 31^st 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 Sale of Machine	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
Sale of Machinery	40000
Sale of land (80000 + 30000)	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