Bestow Ltd’s Statements of financial position are shown. You are informed as follows:

(a) A plant with a written-down value of £354,000 was sold in the year for £280,000. Depreciation written off in the year amounted to £115,000.

(b) Extracts from the company’s Statement of income for the year 2011 appear as stated.

(c) Tax in respect of 2010 was settled at the amount at which it was accounted for.

(d) Apart from paying in March 2011 the dividend declared reported in the Statement of financial position as at 31 December 2010, Bestow Ltd did not pay any other dividend in 2011.

Required:

(a) Prepare a Statement of cash flows for 2011, and

(b) on the basis of the information in the Statement of cash flows make three comments on any change in the company’s liquidity position during the year 2011.

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Statements of financial position as at 31 December Non-current assets Property, plant Investments Current assets: Inventory Trade receivables Cash and bank Equity and reserves: Share capital Share premium Retained earnings Non-current liabilities: 8% Loan notes Current liabilities: Trade payables Taxation Dividend declared 2011 £'000 1,400 150 485 398 34 2,467 750 75 793 2010 £'000 200 800 120 £'000 £'000 215 328 16 1,479 500 50 420 I 496 425 78 59 75 25 2,467 1,479