Question

1. The following is the Comparative Balance Sheet of Vineyard Enterprises Ltd as on 31^th December, 2017 and 31^th December 2018.

LIABILITIES	31-12-17	31-12-18	ASSETS	31-12-17	31-12-18
Share Capital	180,000	200,000	Goodwill	24,000	20,000
Reserve Fund	28,000	36,000	Buildings	80,000	72,000
P & L A/C	39,000	24,000	Machinery	74,000	72,000
Trade Creditors	16,000	10,800	Investments	20,000	22,000
Bank Overdraft	12,400	2600	Inventories	60,000	50800
Provision for taxation	32,000	34,000	Debtors	40,000	44,400
Provision for doubtful debts	3800	4200	Cash	13,200	30,400
TOTAL	311,200	311,600	TOTAL	311,200	311,600

Additional Information:

1. Depreciation charged on Machinery Mk10,000 and on Buildings Mk8000
2. Investments sold during the year Mk3000
3. MK15,000 interim dividend paid during the year
4. Taxes paid during the year Mk30,000

Prepare the following:

1. A Statement of Changes in Working Capital
2. A Funds Flow Statement

Answer 1

Answer (a): All amounts in Mk.

b. A Funds Flow Statement
Sources of Funds	Amount (Mk.)	Application of Funds	Amount (Mk.)
Share Capital	20000
Sale of Investments	3000	Taxes Paid	30000
		Interim Dividend Paid	15000
Adjusted Profit	47000	Increase in Working Capital	25000
	70000		70000

Adjusted Profit & Loss Account
Particulars	Amount (Mk.)	Particulars	Amount (Mk.)
To Provision for Reserve	8000	By bal b/d.	39000
To Provision for Taxation	32000
To Provision for Doubtful Debts	0	By Adjusted Profit	47000
To Depreciation
on Machinery	10000
on Buildings	8000
To Goodwill written off	4000
To bal c/f.	24000
	86000		86000
Provision for Taxation Account
To tax paid	30000	By bal b/d.	32000
To bal c/f.	34000	By Profit & Loss	32000
	64000		64000
Building Account
To bal b/d.	80000	By Depreciation	8000
		By bal c/f.	72000
	80000		80000
Machinery Account
To bal b/d.	74000	By Depreciation	10000
To Bank (Purchase)	8000	By bal c/f.	72000
	82000		82000
Investments Account
To bal b/d.	20000	By Bank (Sale)	3000
To Bank (Purchase)	5000	By bal c/f.	22000
	25000		25000

a. A Statement of Changes in Working Capital Balance Particulars Changes in Working Capital Last Year This Year Increase Decrease Current Assets: Inventories 60,000 50800 9,200 Debtors 40,000 44,400 4,400 Cash 13,200 30,400 17,200 Total Current Assets (A) 1,13,200 1,25,600 Current Liabilities: Trade Creditors 16,000 10,800 5,200 Bank Overdraft 12,400 2600 9,800 Provision for taxation 32,000 34,000 2,000 Provision for doubtful debts 3800 4200 400 Total Current Liabilities (B) 64,200 51,600 Working Capital (A-B) 49,000 74,000 Increase in Working Capital 25,000 36,600 36,600