You are provided with basic financial information about a fictional company and are asked to prepare three financial statements for the company. You are then required to discuss the financial health and position of the organization.
Below, you will find two important documents: the opening statement of financial position and a provisional trial balance for the fictional company.
Remember that the trial balance has been prepared at the end of the year, but note that the retained earnings and inventories balances included are still those figures relating to the start of that year.
Additional information:
An inventory count established that the value of closing inventories on 31 December 2009 was £6,000.
All of the dividends declared during 2009 (and charged as an expense) were paid in that same year, as was the interest expensed for 2009.
Statement of financial position as at 31 December 2008

Required:
Using the above information, prepare an income statement for the company for the year to 31 December 2009.
Prepare a statement of financial position for the company as at 31 December 2009.
Prepare a cash flow statement for the company for the year to 31 December 2009, using the indirect method and in accordance with IAS 7.
Discuss what inferences can be drawn from the above three statements in relation to the company's financial position.

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Non-current assets 10,000 Land Buildings 15,000 (8,000) Less: Accumulated depreciation 7,000 Investments 12,000 29,000 Current assets Inventories 4,000 Accounts receivables 5,000 Cash and cash equivalents 68,000 77,000 Current liabilities Accounts payable 25,000 Tax payable 5,000 30,000 Net current assets 47,000 Total assets less current liabilities 76,000 Equity Common stock 50,000 Retained earnings 26,000 76,000