The draft financial statements of Hanford Ltd are given below: Balance sheet as at 31 December

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The draft financial statements of Hanford Ltd are given below:


Balance sheet as at 31 December

2002                           2001

$’000        $’000            $’000      $’000


Non-current assets

Property, plant & equipment                         5,670                            5,490

(net)

Intangible assets

Goodwill

540


6,210


600


6,090


Current assets

Inventories                                               8,260                              6,820

Trade and other receivables                    6,465                              5,260

Provision for bad debts                           (240)                               (160)

Cash at bank

210

14,695

30

11,950


Current liabilities

Trade and other payable                      3,625                                  3,190

Bank overdraft                                          85                                      425

Interest payable                                        45                                        15

Tax payable

390


(4,145)


480


(4,110)


Net current assets

10,550                              7,840


Total assets less current liabilities

16,760                               13,930


Non-current liabilities

10% note payable                                  900                                   300

Government grant                                      780                                  900

Plant maintenance provision




(1,680)


80


(1,280)


Net assets


15,080


12,650


Capital and reserves

Issued capital,

Ordinary Shares of $1 each                        2,250                           1,500

Reserves

Share premium                                 1,050                                 300

Revaluation                                         450                                     –

Accumulated profits

11,320


12,830


10,850


11,150


15,080


12,650


Income Statement for the Year Ended 31 December 2002

$’000                         $’000

Turnover                                                                                                11,460

Cost of sales

(7,860)

Gross profit                                                                                               3,600

Operating expenses

Depreciation                                           960

Amortisation of goodwill                           60

Interest expense

90


(1,110)

Profit before tax                                                                                         2,490

Taxation

(810)

Profit after tax

1,680

Dividends

1,200

The following information is available:

(1)     Cost of sales includes a loss on sale of plant of $150,000, and a credit for the amortisation of government grants.

(2)     The plant maintenance provision was released to the income statement in the year to 31 December 2002 as these provisions are no longer required, following the company’s change of accounting policy to account for maintenance costs on an actual incurred basis.

(3)     The company revalued its buildings by $600,000 on 1 September 2002. The surplus was credited to a revaluation reserve.

(4)     New plant was acquired during the year at a cost of $750,000 and a government grant of $150,000 was received for the plant. The remaining movement on property, plant and equipment was due to the disposal of obsolete plant.

(5)     On 1 July 2002 a bonus issue of 1 new share for every 10 held was made from the revaluation reserve. In addition to the bonus issue, the company made a further issue of ordinary shares for cash.


Required:

Use the indirect method to prepare a statement of cash flows for Hanford Ltd for the year ended 31 December 2002

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