Given the provided attachment…
1. Prepare a statement of cash flows using the indirect method
a. New equipment costing $85,000 was purchased for cash during the year
b. Old equipment having an original cost of $57,500 was sold for $1,500 cash
c. Bonds matured and were paid off at face value for cash.
d. A cash dividend of $40,350 was declared and paid during the year.
2. Further analysis reveals that accounts payable pertain to merchandise creditors. Prepare a statement of cash flows for Cheng Inc. using the direct method.