Following extracts of Balance Sheet is taken from the financial statements of PQR limited.

An interim dividend of 10% was declared on Equity Share.
Preference Shares were issued on 31^st March 2022.

Net cash flows during the year from Financing Activities will be:

₹10,000 inflow

The correct answer is Option (3) - ₹10,000 inflow.

Dividend on preference shares = 5,00,000 x 8/100
                                             = 40,000 (outflow)

Dividend on equity shares = 20,00,000 x 10/100
                                       = 2,00,000 (outflow)

Issued preference shares = 7,50,000 - 5,00,000
                                     = 2,50,000 (inflow)

All are financing activity.

Cash flow from financing activity = 2,50,000 - 2,00,000 - 40,000
                                                      = 2,50,000 - 2,40,000
                                                      = 10,000 inflow