Far Eastern Limited commenced their year’s operations with the balance sheet shown below:

During the year the business engaged in the following transactions:
*New plant was purchased for £8000 and depreciation provided at one tenth of the original cost of the firm’s fixed assets.
* Sales of £176 000 were made, of which £16 000 were still outstanding at the end of the year. No bad debts were incurred in the year.
* Purchases of £65 000 were made during the year, and the outstanding payables were £31 200 at the end of the year. There was £8790 of stock on hand at the end of the year.
* Other expenses of £71 000 were incurred during the year.
* A dividend of 15p per £1 share was declared and paid during the year.
* Corporation tax was provided at 40 per cent of net profit, excluding depreciation but including a writing down allowance of 25 per cent on fixed assets purchased during the year. No allowance was available against the company’s other assets. The tax liability for the previous year had been calculated at £4100 and was paid during the current year.

You are required to:
(i) Prepare a profit and loss account and balance sheet for Far Eastern Ltd for the year.
(ii) Produce a cash flow statement for Far Eastern for the year.

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Fixed assets Less depreciation Current assets: Stock 13 000 27 600 SH 86 000 20 000 66 000 Debtors Cash 4 200 44 800 Liabilities falling due within one year 37 600 7 200 73 200 Long-term liabilities Equity capital Profit retained 50 000 23 200 10 000 13 200 23 200