Statements of financial position of Pilchard Ltd are given below:

You are informed as follows:

(i) Shown is an extract of the Statement of income for the year ended 31.3.2012.

(ii) There was no acquisition or disposal of non-current assets during the year.

(iii) Loan notes were redeemed at par on 31 March 2012.

Required:

(a) Prepare a Statement of cash flows for the year ended 31 March 2012 using the indirect method.

(b) Prepare a Statement of cash flows on the direct method, taking account of the following additional information:

(i) Sales in the year were £840,000

(ii) Purchases in the year were £620,000.

Clue: The cash balance at beginning of the year was £12,000 whereas the corresponding amount at the end (£3,000 − £11,000 overdraft) was £8,000 negative. Cash outflow = £20,000.

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Statement of financial position as at 31 March 2011 2012 £'000 £'000 £'000 £'000 780 (240) 540 Non-current assets Accumulated depreciation Current assets: Inventory Trade receivables Cash and bank 324 438 12 774 1,314 396 412 3 940 (320) 620 811 1,431