Fundamentals of Accountancy Business and Management-2

(FABM-2)
(Seat Works)

Problem 1:

The bank balance of a business firm has increased during the last financial year by
Rs.1,50,000. During the same period it issued shares of Rs.2,00,000 and redeemed
debentures of Rs.1,50,000. It purchased fixed assets for Rs.40,000 and charged
depreciation of Rs.20,000. The working capital of the firm, other than bank balance,
increased by Rs.1,15,000 during the period. Calculate the profit of the firm for the year.

Solution:

1,50,000 = Profit + 2,00,000 – 1,50,000 – 40,000 + 20,000 – 1,15,000

∴ Profit = Rs.2,35,000

The following information is available from the books of Exclusive Ltd. for the
year ended 31st March, 2016:

(a) Cash sales for the year were Rs.10,000,000 and sales on account Rs.12,000,000.

(b) Payments on accounts payable for inventory totalled Rs.7,800,000.

(c) Collection against accounts receivable were Rs.7,600,000.

(d) Rent paid in cash Rs.2,200,000, outstanding rent being Rs.20,000.

(e) 4,000,000 Equity shares of Rs.10 par value were issued for Rs.48,000,000.

(f) Equipment was purchased for cash Rs.16,800,000.

(g) Dividend amounting to Rs.10,000,000 was declared, but yet to be paid.

(h) Rs.4,000,000 of dividends declared in the previous year were paid.

(i) An equipment having a book value of Rs.1,600,000 was sold for Rs.2,400,000.

(j) The cash account was increased by Rs.37,200,000.

Prepare a cash flow statement using direct method.

Solution:
Problem 4:
Madhuri Ltd. gives you the following information for the year ended 31st March,
2016:
(a) Sales for the year totalled Rs.96,00,000. The company sells goods for cash only.

(b) Cost of goods sold was 60% of sales.

(c) Closing inventory was higher than opening inventory by Rs.43,000.

(d) Trade creditors on 31st March, 2016 exceeded those on 31st March, 2015 by
Rs.23,000.

(e) Tax paid amounted to Rs.7,00,000.

(f) Depreciation on fixed assets for the year was Rs.3,15,000 whereas other expenses
totalled Rs.21,45,000. Outstanding expenses on 31st March, 2015 and 31st March,
2016 totalled Rs.82,000 and Rs.91,000 respectively.

(g) New machinery and furniture costing Rs.10,27,500 in all were purchased.

(h) A rights issue was made of 50,000 equity shares of Rs.10 each at a premium of
Rs.3 per share. The entire money was received with applications.

(i) Dividends totalling Rs. 4,00,000 were distributed among shareholders.

(j) Cash in hand and at bank as at 31st March, 2015 totalled Rs.2,13,800.

You are required to prepare a cash flow statement using direct method.

Solution:
Proceeds from issue of share capital:
Issue price of one share =Rs. 10 + Rs.3 = Rs.13

Proceeds from issue of 50,000 shares = Rs. 13 x 50,000 = Rs. 6,50,000