Question : If 6% Pref. share capital of Rs. 2,00,000 were redeemed at a premium of 5%, while preparing Cash Flow Statement its effect on cash flow will be :
Option 1: Cash used from financing activities Rs.2,12,000
Option 2: Cash received from financing activities Rs.2,12,000
Option 3: Cash used (Payment) from financial activities Rs.2,10,000
Option 4: Cash used (Payment) from financial activities 2,00,000
Answer (1)
20th Jan, 2024
Correct Answer: Cash used (Payment) from financial activities Rs.2,10,000
Solution : Redemption of Pref. Share = Rs.200000 + 10000 = 210000
Note = Rs.200000 + 5% (Premium on Redemption) = Rs.210000
Cash Used (Payment) From Financial activity Rs.210000
Hence the correct answer is Option 3.
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