Prepare a cash flow statement for Lee Ltd for the year ended 31 December \(19 \mathrm{X} 4\) 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. (Do not attempt to provide the reconciliation of net cash flow to net debt.

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