Scully Company’s comparative statements of financial position are presented below.

Additional Information:

1. Net income was £22,630, Dividends declared and paid were £19,500.

2. All other changes in non-current account balances had a direct effect on cash flows, except the change in accumulated depreciation. The land was sold for £4,900.

Instructions

(a) Prepare a statement of cash flows for 2011 using the indirect method.

(b) Compute free cash flow.

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SCULLY COMPANY Comparative Statements of Financial Position December 31 2010 2011 £ 20,000 £ 26,000 Land Building Accumulated depreciation Accounts receivable 70.000 70,000 (10.000) 23,400 10,700 (15,000) 21,200 14,300 Cash Total £110,500 £120,100 £ 75,000 23.130 12,370 £ 69,000 Share capital-ordinary Retained earnings Accounts payable 20.000 31.100 Total £110,500 £120,100