Following are the balance sheets of a limited company as on 31st December, 2016 and 2017.

Liabilites	2016 (₹)	2017 (₹)	Asset	2016 (₹)	2017 (₹)
Share capital	60000	75000	Furniture	36000	43000
P&L A/C	8600	9000	Building	50950	48000
Creditors	22000	18000	Stock	25500	20000
Bills Payable	8000	9000	Debtors	21500	15000
Bank Loan(long term)	22000	-	Goodwill	2500	1520
Reserve	16000	19800	Bank	-	3100
			Cash	150	180
	1,36,600	1,30,800		1,36,600	1,30,800

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

(a) Rs. 8,000 was paid as dividend during the year.

(b) Depreciation on Furniture was charged Rs. 4000 and on Building, it was Rs.3000.

(30 Marks)

SOLUTION             

                      

Funds flow Statement of Limited company

(for the year ending 31-03-17)

(A)                SOURCES	AMOUNT                                         ( ₹)
ISSUE OF SHARES (75000-60000)	15000
FUNDS FROM OPERATION (WORKING NOTE  1)	20180
TOTAL	35180
(B)     APPLICATION OF FUNDS	AMOUNT                                     ( ₹)
REPAYMENT OF LOAN	22000
PURCHASE OF FURNITURE (WORKING NOTE 2)	11000
PAYMENT OF DIVIDEND	8000
PURCHASE OF BUILDING (WORKING NOTE 3)	50
TOTAL	41050
NET DECREASE IN WORKING CAPITAL    (A-B)	5870

                                                                                                                                                                                                                               

                                SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE PERIOD ENDING

PARTICULARS	PREVIOUS YEAR AS ON	CLOSING YEAR AS ON	EFFECTS ON WORKING CAPITAL
			INCREASE (+)	DECREASE(-)
CURRENT ASSETS
CASH	150	180	30
BANK	-	3100	3100
DEBTOR	21500	15000		6500
STOCKS	25500	20000		5500
TOTAL CURRENT ASSETS	47150	38280
CURRENT LIABILITIES
CREDITOR	22000	18000	4000
BILLS PAYABLE	8000	9000		1000
TOTAL CURRENT LIABILITIES	30000	27000
NET DECREASE IN WORKING CAPITAL			5870
TOTAL			13000	13000

                                                                                                                               

                                                               

                                                                                WORKING NOTES

STATEMENTS SHOWING FUNDS FROM OPERATION

FUNDS FROM OPERATION		AMOUNT (₹)
PROFIT&LOSS AS ON 31-03-17		9000
ADD:
DEPRECIATION ON FURNITURE	4000
DEPRECAITION ON BUILDING	3000
WRITINGOFF OF GOODWILL	980
T/F TO RESERVE	3800
PAYMENT OF DIVIDEND	8000
		19780
		28780(9000+19780)
LESS: P&LOSS AS ON 31-03-16		8600
FUNDS FROM OPERATION		20180(28780-8600)

                                                                FURNITURE A/C

 

PARTICULAR	AMOUNT (₹)	PARTICULAR	AMOUNT (₹)
TO BALANCE B/D	36000	BY DEPRECIATION	4000
TO PURCHASE (B/F)	11000	BY BALANCE C/D	43000
	47000		47000

                                                 BUILDING A/C

  

PARTICULAR	AMOUNT (₹)	PARTICULAR	AMOUNT (₹)
TO BALANCE B/D	50950	BY DEPRECIATION	3000
TO PURCHASE(B/F)	50	BY BALANCE C/D	48000
	51000		51000