From the following balance sheet and additional information given, prepare cash flow statement. Balance Sheet as...

From the following balance sheet and additional information given, prepare cash flow statement.

Balance Sheet as on March 31, 2005 and 2006

Particulars	2005 Rs.	2006 Rs.	Particulars	2005 Rs.	2006 Rs.
Share Capital	9,00,000	9,00,000	Fixed Assets	8,00,000	6,40,000
General Reserve	6,00,000	6,20,000	Investments	1,00,000	1,20,000
Profit & loss a/c	1,12,000	1,36,000	Stock	4,80,000	4,20,000
Creditors	3,36,000	2,68,000	Debtors	4,20,000	9,10,000
Provision for tax	1,50,000	20,000	Bank	2,98,000	3,94,000
Mortgage loan	-	5,40,000
	20,98,000	24,84,000		20,98,000	24,84,000

Additional Information:

(a) Investments costing Rs.16,000 were sold during the year for Rs.17,000 (b) Provision for tax made out of profit was Rs.18,000 for the year (c) During the year, a part of the fixed assets costing Rs.20,000 was sold for Rs.24,000 and the

profit was included in Profit and Loss account (d) Dividends paid amounted to Rs.80,000

Expert Solution

Cash flows from operating activities:
Net income	$24000
Adjustments to reconcile net income to net cash provided by operating activities
Income statement items not affecting cash:
Depreciation expense	140000
Gain on sale of Investment	(1000)
Gain on sale of Fixed assets	(4000)
Provision for tax	18000
Transfer to General Reserve	20000
Dividend Paid	80000

Changes in current operating assets and liabilities:
Decrease in Stock	$60000
Increase in Debtor	($490000)
Decrease in Creditors	($68000)
Decrease in Provision for tax	($148000)

Net cash provided by operating activities		$(369000)
Cash flows from investing activities:
Cash received from sale of Investment	$17000
Cash received from sale of Fixed Asset	$24000
Cash paid for Investment	($36000)

Net cash used in investing activities		$5000

Cash flows from financing activities:
Cash received from Loan	$540000
Cash paid to retire notes
Cash paid for dividend	($80000)

Net cash used in financing activities		$460000
Net increase (decrease) in cash		$96000
Bank balance at prior year-end		$298000
Bank balance at current year-end		$394000

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