Problem 11-4A Prepare a statement of cash flows-indirect method (LO11-2, 11-3, 11-4, 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 $3,136,000 Expenses: Cost of goods sold $2,050,000 Operating expenses 878,000 Depreciation expense 29,000 Loss on sale of land 8,200 Interest expense 16,000 Income tax expense 50,000 Total expenses 3,031, 200 Net income $ 104,800 VIDEO PHONES, INC. Balance Sheets December 31 2021 2020 $179,720 83,200 105,000 12,480 $160,760 62,000 137,000 6,240 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 107,000 212,000 274,000 (71,400) $902,000 0 244,000 212,000 (42,400) $779,600 $ 67,800 6,200 15, 200 $ 83,000 10,400 14,200 289,000 227,000 320,000 203,800 $902,000 320,000 125,000 $779,600 Additional Information for 2021: 1. Purchase investment in bonds for $107,000. 2. Sell land costing $32,000 for only $23,800, resulting in a $8,200 loss on sale of land. 3. Purchase $62,000 in equipment by issuing a $62,000 long-term note payable to the seller. No cash is exchanged in the transaction. 4. Declare and pay a cash dividend of $26,000. Required: Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note. (List cash outflows and any decrease in cash as negative amounts.) 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) Decrease in inventory Increase in accounts receivable Increase in prepaid rent Decrease in accounts payable Decrease in interest payable Increase in income tax payable Net cash flows from operating activities Cash Flows from Investing Activities: Purchase investment in bonds Proceeds from sale of land Net cash flows from investing activities Cash Flows from Financing Activities: Payment of cash dividends Net income Net cash flows from financing activities Cash at the beginning of the period Cash at the end of the period Note: Noncash Activities