The income statement, balance sheets, and additional information for Video Phones, Inc., are provided. INC VIDEO PHONES, IL Income Statement For the Year Ended December 31, 2021 Net sales $3,486,000 Expenses: Cost of goods sold $2,300,000 Operating expenses 928,000 Depreciation expense 34,000 Loss on sale of land 8,700 Interest expense 18,500 Income tax expense 55,000 Total expenses 3,344,00 Net income $ 141,800 VIDEO PHONES, INC. Balance Sheets December 31 2021 2020 Assets Current assetst Canh Necounts receivable Inventory Prepaid rent Long-term assets Tumante $ 264,020 88.700 105,000 13,680 $202,660 67,000 142,000 6,840 11) VIUEU PHUNES, INC. Balance Sheets December 31 2021 2020 $ 264,020 88,700 105,000 13,680 $ 202,660 67,000 142,000 6,840 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 112,000 217,000 284,000 (77,400) $1,007,000 0 254,000 217,000 (43,400 $846,100 $ 72,300 6,700 15,700 $ 88,000 11,400 14,700 299,000 232,000 370,000 243,300 $1,007,000 370,000 130.000 $846,100 Additional Information for 2021: Return to question Additional Information for 2021: 1. Purchase investment in bonds for $112,000 2. Sell and costing $37,000 for only $28,300, resulting in a $8,700 loss on sale of land. 3. Purchase $67,000 in equipment by Issuing a $67.000 long-term note payable to the seller. No cash is exchanged in the transaction 4. Declare and pay a cash dividend of $28,500 Required: Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note. (List cash outfiows and any decrease in cash as negative amounts.) Answer is complete but not entirely correct. VIDEO PHONES, INC Statement of Cash Flows For the Year Ended December 31, 2021 Cash Flows from Operating Activities Net income $ 141.800 Adjustments to reconcile net income to net cash flows from operating activities Depreciation expense 34.000 Loos on sale of land) 8,700 Increase in accounts receivable (21,700) 141,800 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) Increase in accounts receivable Decrease in inventory Increase in prepaid rent Decrease in accounts payable Decrease in interest payable Increase in income tax payable 34.000 8.700 (21,700) 37,000 (6,840) (15,700) (4.700) 1,000 C $ 173,560 Net cash flows from operating activities Cash Flows from Investing Activities: Purchase investment in bonds Loss (on sale of land) 112,000 28,300 173,560 Net cash flows from operating activities Cash Flows from Investing Activities: Purchase investment in bonds Loss (on sale of land) 112,000 X 28,300 140,300 Net cash flows from investing activities Cash Flows from Financing Activities: Payment of cash dividends > 28,500 > Net cash flows from financing activities Not 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 28.500 61,360 202,660 264,020 s S S 67.000