Problem 11-7A Calculate operating activitiesdirect method (LO11-4, 11-5, 11-7)

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				$	2,756,000
Expenses:
Cost of goods sold	$	1,700,000
Operating expenses		808,000
Depreciation expense		22,000
Loss on sale of land		7,500
Interest expense		12,500
Income tax expense		43,000
Total expenses					2,593,000
Net income				$	163,000

VIDEO PHONES, INC.
Balance Sheets
December 31
	2021				2020
Assets
Current assets:
Cash	$	172,900			$	102,700
Accounts receivable		75,500				55,000
Inventory		105,000				130,000
Prepaid rent		9,600				4,800
Long-term assets:
Investments		100,000				0
Land		205,000				230,000
Equipment		260,000				205,000
Accumulated depreciation		(63,000	)			(41,000	)
Total assets	$	865,000			$	686,500
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	61,500			$	76,000
Interest payable		5,500				9,000
Income tax payable		14,500				13,500
Long-term liabilities:
Notes payable		275,000				220,000
Stockholders' equity:
Common stock		250,000				250,000
Retained earnings		258,500				118,000
Total liabilities and stockholders equity	$	865,000			$	686,500

Additional Information for 2021:

1. Purchase investment in bonds for $100,000.
2. Sell land costing $25,000 for only $17,500, resulting in a $7,500 loss on sale of land.
3. Purchase $55,000 in equipment by issuing a $55,000 long-term note payable to the seller. No cash is exchanged in the transaction.
4. Declare and pay a cash dividend of $22,500.

Required:

Prepare the statement of cash flows for Video Phones, Inc., using the direct method. Disclose any noncash transactions in an accompanying note. (List cash outflows and any decrease in cash as negative amounts.)