6.8 Hamid prepares his business financial statements to 31 May each year. Because he attended an accounting course at college he knows how to prepare income statements and statements of financial position. However, the course did not include the preparation statements of cash flow and Hamid asks you to prepare a statement of cash flows for his business for the year ending 31 May 2012. He supplies you with the following information:

Hamid: Income statement (summarized) for the year ended 31 May 2012

£

Revenue 437 500 Less: cost of sales (298 423)

Gross profit 139 077 Expenses excluding depreciation (62 505)

Depreciation (7 662)

Operating profit 68 910 Interest received 634 Interest paid (506)

Net profit 69 038 Hamid: Statements of financial position at 31 May 2012 and 31 May 2011 2012 2012 2011 2011

£ £ £ £

ASSETS Non-current assets At cost 82 610 38 750 Less: accumulated depreciation

(21 462) (13 800)

Carrying amount 61 148 24 950 2012 2012 2011 2011 £ £ £ £
Current assets Inventory 26 980 27 420 Trade receivables 44 349 42 760 Cash at bank 5 354 6 642 76 683 76 822 137 831 101 772 CAPITAL AND LIABILITIES Capital Capital brought forward 68 313 33 766 Profit for the year 69 038 63 291 Drawings (23 250) (28 744)
114 101 68 313 Current liabilities Loan – 5 000 Trade payables 23 730 28 459 23 730 33 459 137 831 101 772 1 There were no disposals of non-current assets during the year.
2 Following your request Hamid supplies the following information relating to cash receipts and payments during the year:
Cash receipts £435 911 Cash payments £365 217 Required: prepare Hamid’s statement of cash flows for the year ending 31 May 2012 using

a) the indirect method; and

b) the direct method.