The following are the summarized Balance Sheets of ABC Ltd as on 31st

Question

The following are the summarized 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	0.60
	114.70	159.3

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. You are Required to prepare:

(i) a Statement showing Changes of Working Capital during 2020; and

(ii) A Funds Flow Statement for the same period.

26 Oct 2021

Answer :

Word Count : 548

To prepare the Statement of Changes in Working Capital and a Funds Flow Statement for ABC Ltd for the year 2020, we will follow the steps outlined below. The working capital changes are calculated as the difference between the current year (2020) and the previous year (2019) balance sheets. Let's start with the Statement of Changes in Working Capital:

(i) Statement of Changes in Working Capital for 2020:

Working Capital = Current Assets - Current Liabilities

1. Calculate working capital for both 2019 and 2020:

Working Capital in 2019 = (Inventories + Sundry Debtors + Cash and Bank) - (Sundry Creditors)
Working Capital in 2019 = (30.35 + ____ _____ ____ _________ __________ ______ ____ _________ ___.
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