Problem 11-7A Calculate operating activities-direct 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 $2,516,000 Expenses: Cost of goods sold $1,500,000 Operating expenses 768,000 Depreciation expense 18,000 Loss on sale of land 7,100 Interest expense 10,500 Income tax expense 39,000 Total expenses 2,342,600 Net income $ 173,400 2021 2020 $145,460 71,100 105,000 8,640 $ 69,180 51,000 126,000 4,320 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 96,000 201,000 252,000 (58, 200). $821,000 222,000 201,000 (40, 200) $633,300 $ 57,900 $ 72,000 8, 200 13,100 14,100 267,000 216,000 210,000 266,900 $821,000 210,000 114,000 $633,300 Additional Information for 2021: 1. Purchase investment in bonds for $96,000. 2. Sell land costing $21,000 for only $13,900, resulting in a $7,100 loss on sale of land. 3. Purchase $51,000 in equipment by issuing a $51,000 long-term note payable to the seller. No cash is exchanged in the transaction. 4. Declare and pay a cash dividend of $20,500. For the Year Ended December 31, 2021 Cash Flows from Operating Activities: Net income $ 173,400 Depreciation expense 18,000 Loss (on sale of land) 7,100 Increase in accounts receivable (20,100) Decrease in inventory 21,000 Increase in prepaid rent (4,320) Decrease in accounts payable (14,100) Net cash flows from operating activities Cash Flows from Investing Activities: Decrease in interest payable (3,100) $ 180,980 (3,100) Net cash flows from investing activities Cash Flows from Financing Activities: Purchase investment in bonds (96,000) 13,900 Gain (on sale of land) 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 equipment issuing a note payable (82,100) 76,280 69,180 145,460 $ $ 51,000