Prepare a cash flow statement for Lee Ltd for the year ended 31 December 19X4 as required under FRS 1 using the direct method, together with note 1 to the statement. The profit and loss account, balance sheet and cash account for Lee Ltd for the year 19X4 are given below.

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Sales Profit and Loss Account for the year ending 31 December 19X4 Less Cost of goods sold Less expenses Wages Other costs Depreciation Interest Profit for the year Proposed dividend Retained profit Balance Sheet as at 31 December 6,500 3,000 3,500 2,000 600 500 100 3,200 300 40 260