a) Limited companies are required to produce both an income statement and a statement of cash flows. Outline briefly the main differences between these two financial
statements.

b) The following financial information relates to Freshco Limited for the year ended 31 December 2011:

In addition you are told that during the year ended 31 December 2011:

i) Freshco Limited issued 500,000 ordinary shares with a nominal value of £0.25 per share. The issue was fully subscribed and each share was sold for £1.20. Proceeds from the share issue were used to repay a loan of £350,000 and purchase new equipment for £225,000. These were the only additions to non-current assets during the year ended 31 December 2011.

ii) The company repaid debentures of £135,000.

iii) Equipment with a net book value of £25,500 was disposed of.

iv) During the year ended 31 December 2011 the company paid a dividend of £95,000 to ordinary shareholders.

Required:
Using the indirect method prepare a statement of cash flows for Freshco Ltd for the year ended 31 December 2011.