Data for Cheng Inc. are presented in P17-9A. Further analysis reveals that accounts payable pertain to merchandise creditors.

In p17-9A, Condensed financial data of Cheng Inc. follow.

Additional information:

1. New equipment costing $85,000 was purchased for cash during the year.

2. Old equipment having an original cost of $57,500 was sold for $1,500 cash.

3. Bonds matured and were paid off at face value for cash.

4. A cash dividend of $40,350 was declared and paid during the year.

Instructions

Prepare a statement of cash flows for Cheng Inc. using the direct method.

Transcribed Image Text:

CHENG INC. Comparative Balance Sheets December 31 Assets 2014 2013 $ 80,800 92,800 $ 48,400 33,000 102,850 26,000 114,000 242,500 (52,000) Cash Accounts receivable Inventory Prepaid expenses Investments 117,500 28,400 143,000 270,000 (50,000) $682,500 Equipment Accumulated depreciation-equipment Total $514,750 Liabilities and Stockholders' Equity Accounts payable Accrued expenses payable Bonds payable Common stock Retained earnings $ 67,300 17,000 150,000 175,000 105,450 $112,000 16,500 110,000 220,000 224,000 Total $682,500 $514,750 CHENG INC. Income Statement For the Year Ended December 31, 2014 Sales revenue $392,780 Less: $135,460 Cost of goods sold Operating expenses, excluding depreciation Depreciation expense Income tax expense 12,410 46,500 27,280 4,730 7,500 Interest expense Loss on disposal of plant assets 233,880 $158,900 Net income