Meera Ltd.’s comparative statements of financial position are presented below.

Additional information:

1. Net income was £22,590. Dividends declared and paid were £16,500.

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 £5,000.

Instructions

a. Prepare a statement of cash flows for 2020 using the indirect method.

b. Compute free cash flow.

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Meera Ltd. Comparative Statements of Financial Position December 31 2020 2019 £ 20,000 £ 26,000 Land Buildings Accumulated depreciation-buildings 70,000 70,000 (10,000) 23,400 10,700 (15,000) 20,800 Accounts receivable Cash 17,660 Total £113,460 £120,100 £ 75,000 26,090 £ 72,000 Share capital-ordinary Retained earnings Accounts payable 20,000 28,100 12,370 £120,100 Total £113,460