Answer to Question #198822 in Management for Doll

Question

Balance Sheets of ABC Ltd as on 31st December, 2019 and 31st December 2020, respectively: Balance Sheets as at 31st December 2019 2020 (Rs. In thousands) Assets: Freehold Property at Cost 33.00 24.00 Plant and machinery (cost less depreciation) 20.80 60.30 Inventories 30.35 32.85 Sundry Debtors 20.10 24.75 Cash and Bank 9.25 16.80 Preliminary Expenses 1.20 114.70 0.60 159.30 Liabilities: Issued Share Capital 60.00 75.00 Share Premium Account - 5.00 Capital Reserve - 17.00 Profit & Loss Account 21.50 21.20 Sundry Creditors 27.20 32.60 Proposed Dividends 6.00 8.50 114.70 159.30 No plant and machinery was sold during the year 2020. Depreciation written off during 2020 was Rs 7,500. Net Profit for the year was Rs. 8,200. dividend paid during 2020 in respect of previous year was Rs. 6,000 . Capital reserve represented a profit on sale of freehold premises.prepare: (i) a Statement showing Changes of Working Capital during 2020; and (ii) A Funds Flow Statement for the same period

Answer 1

 From the Balance Sheet of ABC Ltd for the year ending 2019 and 2020, Statement of Changes in Working Capital

Current Assets                                   2019               2020               change in working capital

Inventory                                                           30.35                    32.85                    2.5

Sundry Debtors                                               20.10                    24.75                    4.65

Cash and Bank                                                  9.25                       16.80                    7.55

                                                                               59.7                       74.4                       14.7

Current Liabilities                                            

Sundry Creditors                                             27.20                    32.60                    5.4

Proposed Dividend                                        6.0                         8.5                         2.5

                                                                               33.2                       41.1                       7.9

Working capital                                                26.5                       33.3                       6.8

A Funds Flow Statement for the same period

Statement showing funds from operations

Funds from operations

 Profits and loss Account (2020)                                                                                               21.20

Depreciation                                                                     7.5         

Proposed dividend                                                         6.00

Amount transferred reserves                                   6.8

                                                                                               20.3                                                       20.3

Profit and loss Account (2019)                                                                                                  (21.50)

                                                                                                  

Funds for operation                                                                                                                       20

Statement of Fund Flow at the year ended 31^st December 2020

Source of funds               (A)                                                                                                        20

Share premium Account                                                                                             5                                                                                                                                                                                                          25

Application of funds

               Purchase Freehold Property at Cost                       24

               Purchase Plant and machinery                                  60.30

               Dividend paid                                                                   6.00

Total Application (B)                                                                      90.3

Net Decrease in Working Capital (A – B)                                                               65.3