The following are the financial statements of Rich Corporation: Rich Corporation Statements of Financial Position December 31 2023 2022 Assets: Cash.. $ 40,890 $ 38,040 Accounts receivable... 37,180 34,400 Merchandise inventory. 73,125 61,710 Long-term Investments.... 55,900 56,400 Equipment.. 175,500 145,500 Accumulated depreciation...... (33,550) (31,200) Total assets.. $349,045 $304,850 Liabilities: Accounts payable... $75,000 $50,380 Income tax payable... 10,725 10,200 Bonds payable.... 50,000 66,000 Total liabilities.. $135,725 $126,580 Equity: Share Capital.. 127,000 106,000 Share Premium...... 13,000 9,000 Retained earnings.. 73,320 63,270 Total equity.. $213,320 $178,270 Total liabilities and equity.. $349,045 $304,850 2 2023-24 Semester 2 Principles of Accounting II Assignment 3 - Question Paper Rich Corporation Income Statement For Year Ended December 31, 2023 Sales....... $1,240,000 Cost of goods sold... (580,900) Gross profit 659,100 Depreciation expense.. $(229,400) Other operating expenses...... (248,000) Interest expense...... (2,000) Other gains (losses): Loss on sale of equipment.. (8,400) (487,800) Profit before tax...... 171,300 Income tax expense... (127,650) Net profit... $43,650 Additional information: (1) There was no gain or loss on the sales of the long-term investments, nor on the bonds retired. (2) Old equipment with an original cost of $37,550 was sold for $2,100 cash. (3) New equipment was purchased for $67,550 cash. (4) Cash dividends of $33,600 were paid. Management wishes to classify this under financing activities. (5) Additional shares were issued for cash. Required: (a) Prepare a complete statement of cash flows for the year 2023, using indirect method. (14 marks) (b) State the purpose for preparing the cash flow statement. (2 marks) (c) Explain the value of separating cash flows into three sections and give an example of information in each of the sections that may help the users to understand the cashflow activities of the company. (4 marks)