Maharishi Ltd, gives you the following information for the year ended 31st March, 2026: (i) The company sells goods for cash only. Cost of goods…

CA Intermediate · Advanced Accounting · PYQS · May 2026
Maharishi Ltd, gives you the following information for the year ended 31st March, 2026: (i) The company sells goods for cash only. Cost of goods sold was 60% of sales. Closing inventory was higher than opening inventory by - 34,400. Trade payables on 31st March, 2026 exceed the balance of trade payables on 31st March, 2025 by - 18,400. (ii) Net profit before taxation was - 11,04,000. Tax paid amounted to 5,60,000. Depreciation on fixed assets for the year was - 2,52,000. Outstanding expenses on 31st March, 2025 and 31st March, 2026 totalled - 65,600 and - 72,800 respectively. (iii) New machinery costing - 8,22,000 was purchased during the year 2025-26. (iv) Issued Bonds of 5,00,000 at face value in an exchange for plant assets on 30th March, 2026. (v) A right issue was made of 40,000 equity shares of 10 each at a premium of 4 per share. The entire money was received with application. (vi) Investment costing - 1,20,000 were sold at a profit of 20,000. (vii) Dividends paid during the year 3,31,200. (viii)Cash and cash Equivalents on 31st March, 20251,71,040. You are required to prepare a statement of cash flows as per AS-3 (Revised), using indirect method and ascertain the closing balance of cash and cash equivalent on 31st March, 2026.

Suggested Answer and Working Notes:

Cash Flow Statement for the year ended 31 March, 2026 (Using the Indirect Method as per AS-3) Particulars (₹) (₹) (A) Cash Flow from Operating Activities Net Profit before taxation 11,04,000 Adjustments for non-cash and non-operating items: Add: Depreciation 2,52,000 Less: Profit on sale of investment (20,000) 2,32,000 Operating Profit before Working Capital changes 13,36,000 Adjustments for Working Capital: Less: Increase in Inventory (34,400) Add: Increase in Trade Payables 18,400 Add: Increase in Outstanding Expenses (72,800 - 65,600) 7,200 (8,800) Cash generated from operations 13,27,200 Less: Income Tax Paid (5,60,000) Net Cash from Operating Activities (A) 7,67,200 (B) Cash Flow from Investing Activities Purchase of Machinery (8,22,000) Sale of Investment (1,20,000 cost + 20,000 profit) 1,40,000 Net Cash used in Investing Activities (B) (6,82,000) (C) Cash Flow from Financing Activities Proceeds from Rights Issue (40,000 shares × ₹ 14) 5,60,000 Less: Dividend Paid (3,31,200) Net Cash from Financing Activities (C) 2,28,800 Net Increase in Cash and Cash Equivalents (A + B + C) 3,14,000 Add: Cash and Cash Equivalents at the beginning (31.03.2025) 1,71,040 Cash and Cash Equivalents at the end (31.03.2026) 4,85,040

Topics: AS 3

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