Q1.
Western Telecommunication Company’s balance sheet as at March 31, 20X7 and 20X8 and
statement of profit and loss for the year ended March 31, 20X8 are as follows:
Assets
Non-current assets
Property, plant and equipment ₹720,00 ₹540,00
0 0
Deduct Accumulated depreciation 362,000 305,000
Property, plant and equipment, net 358,000 235,000
Current assets
Inventories. 151,000 119,000
Financial assets
Investments 18,000 66,000
Trade receivables (net of allowance for credit losses ₹8,000, 29,000 166,000
₹12,000).
Cash and cash equivalents 12,000 69,000
Other current assets: Prepaid expenses 6,000 2,000
Total assets. 574,000 657,000
Equity and Liabilities
Equity
Equity share capital ₹155,00 ₹85,000
0
Other equity. 102,000 120,000
Liabilities
Non-current liabilities
Financial liabilities
Borrowings 87,000 57,000
Other non-current liabilities 191,000 191,000
Current liabilities
Financial liabilities
Trade payables... 30,000 187,000
Current tax liabilities 9,000 17,000
Total equity and liabilities 574,000 657,000
Sales ₹570,000
Interest income 2,000
Gain on sale of investments 7,000
Total income 579,000
Expenses
Cost of goods sold 445,000
Depreciation expense 89,000
Selling and administrative expenses 46,000
Finance costs 14,000
Loss on sale of equipment 3,000
Total expenses 597,000
Profit before tax 18,000
Tax expense 0
Profit for the period (18,000)
Additional information:
1. Purchased equipment for cash, `150,000.
2. Sold equipment for cash, `10,000 (cost, `45,000; accumulated depreciation, `32,000).
3. Purchased investments for cash, `30,000.
4. Sold investments for cash, `85,000 (cost, `78,000).
5. Purchased equipment in exchange for debentures, `75,000.
6. Issued shares for cash, `50,000.
7. Converted debentures into equity shares, `20,000.
8. Redeemed debentures, `25,000.
9. Wrote off `14,000 of trade receivables and recognized bad debt expense of `10,000, included
in selling and administrative expenses.
Required
1. Prepare the statement of cash flows using the direct method.
Prepare the statement of cash flows using the indirect method.
Q2. Gopal Dairy Company’s statement of profit and loss for the year ended September 30, 20X7
is as follows:
Sales ₹27100
Interest income 400
Gain on sale of investments 100
Total income 27,600
Expenses
Cost of goods sold 18,600
Depreciation expense 4,800
Selling and administrative expenses 1900
Finance costs 600
Loss on sale of equipment 200
Total expenses 26,100
Profit before tax 1500
Tax expense 800
Profit for the period 700
During the period, inventories decreased by `900, trade receivables (gross) increased by `1,200,
trade payables decreased by `700, and income tax payable increased by `300. Selling and
administrative expenses include bad debt expense of `400. Trade receivables in the amount of
`200 were written off during the period.
Q3. The statement of profit and loss of Shamsher Leather Company for the year ended March 31,
20X8 is as follows:
Sales ₹76,900
Dividend income 300
Interest income 200
Gain on disposal of plant 800
Total income 78,200
Expenses
Cost of goods sold 58,300
Depreciation expense 9,500
Selling and administrative expenses 2,700
Finance costs 900
Loss on sale of investment 300
Total expenses 71,700
Profit before tax 6,500
Tax expense 2,800
Profit for the period 3,700
During the period, inventories increased by `1,500, trade receivables (gross) decreased by `2,300,
trade payables decreased by `1,600, and income tax payable decreased by `500. Selling and
administrative expenses include bad debt expense of `700. Trade receivables in the amount of
`300 were written off during the period.
Q4. Bharti Airtel Company’s its balance sheet as at October 31, 2015 and 2014 statement of
profit and loss for the year ended October 31, 2015 are as follows:
Bharti Airtel Company
Balance Sheet, October 31, 2015
2015 2014
Assets
Non-current assets
Property, Plant and equipment, at cost 89500 68600
Deduct Accumulated depreciation 41900 37600
Property plant and Equipment net 47600 31000
Non-current investments
Current Assets
Inventories 21300 16400
Financial Assets
Trade receivables (net allowance for credit losses Rs.2900, 9800 4300
Rs.1800)
Cash and Cash equivalents 1200 3800
Other current assets: Prepaid expenses 2400 1500
Total assets 87800 71600
Equity and Liabilities
Equity
Equity share capital 49000 41000
Other Equity 12600 9700
Liabilities
Non-current liabilities
Financial liabilities
Borrowings 9500 14200
Bills Payable 5500 0
Current liabilities
Financial Liabilities
Trade payables 10300 4800
Current Tax liabilities 900 1900
Total equity and liabilities 87800 71600
Bharti Airtel Company
Statement of Profit and Loss
For the year ended October 31, 2015
Sales 92700
Dividend income 1800
Interest Income 1200
Gain on sale of plant 2300
Total income 98000
Expenses
Cost of goods sold 75100
Finance costs 2200
Selling and administrative expenses 14500
Loss on sale of investments 1400
Total expenses 93200
Profit/Loss before tax 4800
Tax expense 1900
Profit/Loss for the period 2900
Additional Information:
a) Property, plant and equipment include land, Rs. 7500 in 2015 and 2014. Land is not
depreciated.
b) Purchased machinery for cash, Rs.19900.
c) Sold a plant, Rs. 5000 (cost, Rs.4500; accumulated depreciation, Rs. 1800).
d) Purchased machinery on long-term credit, Rs. 5500.
e) Purchased investments, Rs.1900.
f) Sold investments, Rs. 9600 (cost, Rs.11000).
g) Redeemed debentures, Rs. 4700.
h) Issued at par equity shares, Rs. 8000.
i) Wrote off Rs. 2100 of trade receivables and recognized bad debt expense of Rs. 3200,
included in selling and administrative expenses.
j) Cost of goods sold includes depreciation of Rs. 6100.
Required:
Present the statement of cash flows using the indirect method.
