ABE, Inc. issued 10% bonds, dated January 1, with a face amount of $32 million on January 1, 2018. The bonds mature in 2028 (10 years). For bonds of similar risk and maturity the market yield is 12%. Interest is paid semiannually on June 30 and December 31. ABE recorded the issue as follows:

Cash 28,329,472

Discount on bonds 3,670,528

Bonds payable 32,000,000

ABE also issued 15,000, 6% cumulative preferred stock $100 par value on January 1, 2018. ABE paid preferred dividends on September 15, 2018 for $90,000.

ABE recorded the issue of preferred stock as follows:

Cash 3,600,000

Preferred stock 1,500,000

Paid-in capital in excess of par 2,100,000

ABE also leased equipment to Savvy Innovations, Inc., (SII) on September 30, 2018. ABE purchased the equipment from Lilly Corp. at a cost of $6 million. The five-year lease agreement calls for SII to make quarterly lease payments of $391,548, payable each September 30, December 31, March 31, and June 30, with the first payment on September 30, 2018. ABE implicit interest rate is 12%.

Required:

1. What would be the amount(s) related to the bonds that ABE would report in its statement of cash flows for the year ended December 31, 2018, if ABE uses the direct method? The indirect method?

2. What would be the amount(s) related to the preferred stock that ABE would report in its statement of cash flows for the year ended December 31, 2018, if ABE uses the direct method? The indirect method?

3. What would be the amounts related to the lease that Savvy Innovations, Inc. would report in its statement of cash flows for the year ended December 31, 2018?