hestion 5 ot yet aswered Mr. Kushagra is the Chairman of Budding Entrepreneurs Limited which completed its first year of operation on 31st march 2021. Ms. Shivani is the CFO (Chief Financial Officer) of the Company. Followings are the excerpts from their conversation before the meeting of Board of Directors to propose the dividend for the current financial year: arked out of 6.00 Chairman: I am really glad to note that the company has made a profit of over Rs. 8,75,262 in the very first year. I feel we may declare a dividend to 5% to our equity shareholders. Flag question Ms. Shivani : Sir, it had been a good year in terms of our financial performance but I am skeptical about the payment of dividend to our equity shareholders. Chairman: A dividend @5% on the equity share capital of Rs. 44, 00,000 would require Rs.2,20,000. We can easily payout this amount from the profit of Rs.8,75,262. So, what is the problem? Ms. Shivani : Sir, We have adequate book profit to pay the dividend but the company is running short of cash to pay as our cash balance is only Rs. 37,850. Chairman: I really fail to understand your accounting calculations. If the profit is Rs.8,75,262 then where the cash is lost? Ms. Shivani is trying to explain the cash position to the Chairman with the help of Statement of Cash Flow. He seeks your help in preparing the Cash Flow Statement stating Cash from Operating Activities, Investing Activities and Financing Activities. randing 31st March, 2021 Time left 2:24:27 Income Statement of Budding Entrepreneurs Limited for the year ending 31st March,2021 Particulars Amounts Income : Sales 43,25,000 Expenses : Raw material Consumed 15,25,000 General Expenses 7,31,800 68.350 Salary & Wages Director's Remuneration 40,000 Provision for Bad & Doubtful Debts 73,500 EBITDA 18,86,350 Less : Provision for Depreciation 4,95,000 EBIT 13,91,350 2,50,000 Less : Interest on Debentures 11,41,350 Earnings Before Tax 2,66,088 Less : Provision for Taxation 8.75.262 Earnings After Tax 4,00,000 Less : Transfer to General Reserve 4.75.262 Surplus Balance Sheet as on 31st March, 2021 Particulars Amounts Equity & Liabilities : Shareholders Capital: Share Capital 44,00,000 General Reserve 4,00,000 4,75,262 Surplus 52,75,262 Loan Funds 10% Debentures 25,00,000 Current Liabilities Accrued Interest on Debentures 1.25,000 Trade Payables Provision for Income Tax 6,70,000 2,66,088 88,36,350 Total Assets : 68,27,000 Non-Current Assets : Gross Assets : 73,22,000 - Depreciation 4,95,000) Current Assets : Inventory 6,25,000 Trade Receivables ; 10,97,000 10,23,500 Provision for Income Tax 2,66,088 Total 88,36,350 Assets : 68,27,000 Non-Current Assets : Gross Assets : 73,22,000 - Depreciation 4,95,000) Current Assets Inventory 6,25,000 10,23,500 Trade Receivables : 10,97,000 Less; Prov For B.D.D. 73,500 48,000 Advance Salary Paid 2,75,000 Advance Income Tax Paid 37,850 Cash in Hand & at Bank 88,36,350 Total