You are required to produce a cash flow statement for Daubyhaven Ltd for the year ended 31 December year 2.

During the year ending 31 December year 2 a A machine that had originally cost £15,000, and on which

£12,000 depreciation had been charged, was sold for £4,500.

b Operating profit, including the profit on the sale of the machine, was £35,000.

c Interest of £2,000, taxation of £8,000 and dividends of £18,000 were paid.

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Summarized statement of financial position of Daubyhaven Ltd as at 31 December Year 1 Year 2 Non-current assets 000 000 000 000 Machinery at cost 120 130 Provision for depreciation (60) 60 (68) 62 Current assets Inventories 30 50 Receivables 30 35 Cash 10 70 85 = Total assets 130 147 Current liabilities Trade payables Overdraft 20 20 18 12 30 Non-current liabilities Debentures Equity Share capital Retained earnings 30 20 28 50 60 30 80 37 97 130 147 220