The cash flows below were extracted from the accounts of Picasso and Partners, a painting and decorating business.

Required: 

Prepare a statement of cash flows under the indirect method for the year ended 31 December 2012. Prepare a separate reconciliation statement from operating profit to operating cash flow. You know that the operating profit was £111,000 with £75,000 of working capital adjustments to be deducted and £15,000 of non-cash adjustments to be added back to arrive at operating cash flow. The operating profit has already been adjusted for the interest paid and received (so do not adjust again!).

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Bank interest paid 1,000 Purchase of a building 88,000 Loan received 9,000 Sale of office furniture 2,300 Cash for sale of a motor car 4,000 Payment for a motor car 12,000 Interest received 300