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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,

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, 2018
Net sales $ 2,696,000
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 2,530,400

Net income $ 165,600

VIDEO PHONES, INC. Balance Sheet December 31
2018 2017
Assets
Current assets:
Cash $ 166,040 $ 94,320
Accounts receivable 74,400 54,000
Inventory 105,000 129,000
Prepaid rent 9,360 4,680
Long-term assets:
Investments 99,000 0
Land 204,000 228,000
Equipment 258,000 204,000
Accumulated depreciation (61,800) (40,800)

Total assets $ 854,000 $ 673,200

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 60,600 $ 75,000
Interest payable 5,400 8,800
Income tax payable 14,400 13,400
Long-term liabilities:
Notes payable 273,000 219,000
Stockholders' equity:
Common stock 240,000 240,000
Retained earnings 260,600 117,000

Total liabilities and stockholders equity $ 854,000 $ 673,200

Additional Information for 2018: 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 borrowing $54,000 with a note payable due in three years. No cash is exchanged in the transaction. 4. Declare and pay a cash dividend of $22,000.

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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, 2018 Cash Flows from Operating Activities: Adjustments to reconcile net income to net cash flows from operating activities Net cash flows from operating activities Cash Flows from Investing Activities Net cash flows from investing activities

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