11.3 The following information is provided for Sharpener Ltd:

Balance sheets as at 31 December 20X4 20X5

£ £

Fixed assets Cost 650,000 680,000 Less: Accumulated depreciation − 176,500 − 203,700 473,500 476,300 Current assets Stock 126,400 127,500 Trade debtors 97,700 95,000 Bank balance 23,600 –

247,700 222,500 Less: Creditors due within one year Bank overdraft − 37,900 Trade creditors − 72,900 − 87,100 Proposed ordinary dividend − 44,000 − 44,000 − 116,900 − 169,000 Working capital 130,800 53,500 Total assets less current liabilities 604,300 529,800 Less: Creditors due after more than one year 6% Debentures repayable 20X9 − 100,000 − 20,000 504,300 509,800 Financed by:
Share capital 400,000 400,000 Retained profit 104,300 109,800 504,300 509,800 During 20X5 the directors offered to repay the debentures, and this invitation was accepted by the majority of the debenture holders.

(a) A cash flow statement for 20X5.

(b) A brief explanation for the decline in the bank balance based on the information contained in the statement.