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The income statement, balance sheets, and additional information for Video Phones, Inc., are provided. 3,086,000 VIDEO PHONES, INC. Income Statement For the Year Ended December

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The income statement, balance sheets, and additional information for Video Phones, Inc., are provided. 3,086,000 VIDEO PHONES, INC. Income Statement For the Year Ended December 31, 2018 Net sales Expenses: Cost of goods sold $ 2,000,000 Operating expenses 868,000 Depreciation expense 28,000 Loss on sale of land 8,100 Interest expense 15,500 Income tax expense 49,000 Total expenses 2,968,600 Net income 117,400 VIDEO PHONES, INC. Balance Sheets December 31 2018 2017 Assets Current assets: Cash Accounts receivable Inventory Prepaid rent Long-term assets: Investments Land Equipment Accumulated depreciation 182,860 $ 82,100 105,000 12,240 152,380 61,000 136,000 6,120 106,000 211,000 272,000 (70,200) 242,000 211,000 (42,200) Total assets $ 901,000 $ 766,300 VIDEO PHONES, INC. Balance Sheets December 31 2018 2017 $ Assets Current assets: Cash Accounts receivable Inventory Prepaid rent Long-term assets: Investments Land Equipment Accumulated depreciation 182,860 82,100 105,000 12,240 152,380 61,000 136,000 6,120 106,000 211,000 272,000 (70,200) 242,000 211,000 (42,200) Total assets 901,000 $ 766,300 $ Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock Retained earnings 66,900 6,100 15,100 82,000 10,200 14,100 287,000 226,000 310,000 215,900 310,000 124,000 Total liabilities and stockholders' equity $ 901,000 $ 766,300 Additional Information for 2018: 1. Purchase investment in bonds for $106,000. 2. Sell land costing $31,000 for only $22,900, resulting in a $8,100 loss on sale of land. 3. Purchase $61,000 in equipment by borrowing $61,000 with a note payable due in three years. N 4. Declare and pay a cash dividend of $25,500. Additional Information for 2018: 1. Purchase investment in bonds for $106,000. 2. Sell land costing $31.000 for only $22.900, resulting in a $8,100 loss on sale of land. 3. Purchase $61,000 in equipment by borrowing $61,000 with a note payable due in three years. No cash is exchanged in the transaction. 4. Declare and pay a cash dividend of $25,500. Required: Prepare the statement of cash flows for Video Phones, Inc., using the direct method. Disclose any noncash transactions in an accompanying note. in cash as negative amounts.) VIDEO PHONES, INC. Statement of Cash Flows For the Year Ended December 31, 2018 Cash Flows from Operating Activities: Cash received from customers Cash paid to suppliers Cash paid for operating expenses Cash paid for interest Cash paid for income taxes Net cash flows from operating activities Cash Flows from Investing Activities: Purchase investment in bonds Net cash flows from investing activities Cash Flows from Financing Activities: Payment of cash dividends VIDEO PHONES, INC. Statement of Cash Flows For the Year Ended December 31, 2018 Cash Flows from Operating Activities: Cash received from customers Cash paid to suppliers Cash paid for operating expenses Cash paid for interest Cash paid for income taxes Net cash flows from operating activities Cash Flows from Investing Activities: Purchase investment in bonds Net cash flows from investing activities Cash Flows from Financing Activities: Payment of cash dividends Net cash flows from financing activities Cash at the beginning of the period Cash at the end of the period Note: Noncash Activities

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