Problem 11-4A Prepare a statement of cash flows-indirect method (L011-2, 11-3, 11-6, 11-5) The income statement, balance sheets, and additional Information for Video Phones, Inc., are provided. VIDEO PHONES, INC. Income Statement For the Year Ended December 31, 2021 Net sales $3,536,000 Expenses: Cost of goods sold $2,350,000 Operating expenses 938,000 Depreciation expense 35,000 Logs on sale of land 8,800 Interest expense 19,000 Income tax expense 56,000 Total expenses 3,406,800 Net income $ 129,200 VIDEO PHONES, INC. Balance Sheets December 31 2021 2020 $ 260,880 89,800 105,000 13,920 $211,040 68,000 143,000 6.960 Assets Current assets Cash Accounts receivable Inventory Prepaid rent Long-term assets Investments Land Equipment Accumulated depreciation Total assets Liabilities and Stockholders' Equity 113,000 218,000 286,000 (28,6002 $1,000,000 256,000 218,000 03.600) $859,400 VIDEO PHONES, INC. Balance Sheets December 31 2021 2020 $ 260,880 89,800 105,000 13,920 $211,040 68,000 143,000 6,960 Assets Current assets! Cash Accounts receivable Inventory Prepaid rent Long-term assets Investments Land Equipment Accumulated depreciation Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stockholders' equity! Common stock Retained earnings Total liabilities and stockholders' equity 113,000 218,000 286,000 (78,600) $1,000,000 0 256,000 218.000 (43,600 $859,400 $ 73,200 6,800 15,800 $ 89.000 11,600 14,800 301,000 233,000 380,000 231,200 $1,008,000 380,000 131,000 $859,400 Additional Information for 2021: 1. Purchase investment in bonds for $113,000. 2. Sell land costing $38,000 for only $29,200, resulting in a $8,800 loss on sale of land. 3. Purchase $68,000 in equipment by Issuing a $68,000 long-term note payable to the seller. No cash is exchanged in the transaction 4. Declare and pay a cash dividend of $29,000. Required: Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note. (L outflows and any decrease in cash as negative amounts.) $ 129,200 VIDEO PHONES, INC. Statement of Cash Flows For the Year Ended December 31, 2021 Cash Flows from Operating Activities: Net income Adjustments to reconcile net income to net cash flows from operating activities: Depreciation expense Loss (on sale of land) Increase in accounts receivable Decrease in inventory Increase in prepaid rent Decrease in accounts payable Decrease in interest payable Increase in income tax payable 35,000 8,800 $ 173,000 Net cash flows from operating activities Cash Flows from Investing Activities: Purchase investment in bonds Proceeds from sale of land Alat aneh An fanm imunin natin Increase in accounts receivable Decrease in inventory Increase in prepaid rent Decrease in accounts payable Decrease in interest payable Increase in income tax payable $ 173,000 Net cash flows from operating activities Cash Flows from Investing Activities: Purchase investment in bonds Proceeds from sale of land 0 Net cash flows from investing activities Cash Flows from Financing Activities: Payment of cash dividends $ (29,000) (29,000) Net cash flows from financing activities Net increase in cash Cash at the beginning of the period Cash at the end of the period Note: Noncash Activities Purchase of equipment 211,040 211,040 $ 68,000
