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. $2,696,000 VIDEO PHONES, INC. Income Statement For the Year Ended December 31, 2021 Net sales Expenses: Cost of goods sold $1,650,000 Operating expenses 798,000 Depreciation expense 21,000 Loss on sale of land 7,400 Interest expense 12,000 Income tax expense 42,000 Total expenses Net income 2,530,400 $ 165,600 VIDEO PHONES, INC. Balance Sheets December 31 2021 2020 $ 166,040 74,400 105,eee 9,36 $ 94,320 54,000 129,000 4,689 Assets Current assets: Cash Accounts receivable Inventory Prepaid rent Long-term assets: Investments Land Equipment Accumulated depreciation Total assets Liabilities and Stockholders' Equity 99,000 204,000 258,eee (61,800) $ 854,000 228,000 204,000 (40,800) $673,200 VIDEO PHONES, INC. Balance Sheets December 31 2021 2020 $ 166,040 74,400 105,000 9,360 $ 94,320 54,000 129,000 4,680 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 99,000 204,000 258,000 (61,800) $ 854,000 228,000 204,000 (40,800) $673,200 $ 60,600 5,400 14,400 $ 75,000 8,800 13,400 273,000 219,000 240,000 240,000 260,600 $ 854,000 117,000 $673,200 Additional Information for 2021: 1. Purchase investment in bonds for $99,000. 2. Sell land costing $24,000 for only $16,600, resulting in a $7,400 loss on sale of land. 3. Purchase $54,000 in equipment by issuing a $54,000 long-term note payable to the seller. No cash is exchanged in the transaction. 4. Declare and pay a cash dividend of $22,000. Required: Rronaro.tbastatomant.of cash flowcucina.tho.indiroct.method Diccloco.nu.noncas trangatianu narvinonotont.cach 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) $ 165,600 Decrease in inventory Increase in accounts receivable Increase in prepaid rent Decrease in accounts payable Decrease in interest payable Increase in income tax payable 21,000 7,400 24,000 (20,400) (4,680) (14,400) (3,400) 1,000 S 176,120 Net cash flows from operating activities Cash Flows from Investing Activities: Purchase investment in bonds Proceeds from sale of land (99,000) 16,600 (82,400) Net cash flows from investing activities Cash Flows from Financing Activities: Increase in prepaid rent Decrease in accounts payable Decrease in interest payable Increase in income tax payable (4,680) (14,400) (3,400) 1,000 $ 176,120 Net cash flows from operating activities Cash Flows from Investing Activities: Purchase investment in bonds Proceeds from sale of land (99,000) 16,600 (82,400) Net cash flows from investing activities Cash Flows from Financing Activities: Payment of cash dividends $ (22,000) Net cash flows from financing activities Net increase cash Cash at the beginning of the period Cash at the end of the period Note: Noncash Activities Purchase of equipment (22,000) 71,720 94,320 166,040 $