Wong Corporation began operations on January 1, 2022. Its adjusted trial balance at December 31, 2022 and 2023, is shown below along with some other information.

¹$2,000 of the notes payable will be paid during 2024.Other information regarding Wong Corporation and its activities during 2023:1. Assume all accounts have normal balances.2. Equipment was purchased for $26,000 cash after selling old equipment for $8,000 cash.3. Common shares were issued for cash.4. Cash dividends were declared and paid.5. Machinery was sold for cash of $10,000.6. All revenues and other expenses were on credit.

RequiredUsing the information provided, prepare a statement of changes in equity and a statement of cash flows (applying the indirect or direct method)* for the year ended December 31, 2023, plus a classified balance sheet at December 31, 2023.

Analysis Component:Refer to the statement of cash flows just prepared. Explain how it was possible for Wong Corporation to purchase $26 (thousand) of new equipment and pay $20 (thousand) dividends given that the company’s income was only $16 (thousand).

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Wong Corporation Adjusted Trial Balance (000s) Account Accounts payable... Accounts receivable... Accumulated depreciation, equipment.... Accumulated depreciation, machinery..... Allowance for doubtful accounts... Cash............ Cash dividends.............. Common shares.. Depreciation expense, equipment... Depreciation expense, machinery.. Equipment.... Income tax expense... Machinery............. Notes payable; long term¹.. Other expenses (including losses).. Preferred shares......... Retained earnings........ Revenues (including gains)... Unearned revenue...... December 31 2023 2022 $ 21 $ 32 96 21 15 6 70 20 108 7 4 88 10 34 8 373 30 75 410 4 100 52 36 12 98 20 98 7 4 110 19 64 25 200 30 79 316 8