Question

The income statement, balance sheets, and additional information for Video Phones, Inc., are provided. $3,486,000 VIDEO PHONES, INC. Income Statement For the Year Ended December 31, 2021 Net sales 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 Net income 3,344,200 $ 141,800 VIDEO PHONES, 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) $1,007,000 254,000 217,000 (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: 1. Purchase investment in bonds for $112,000. 2. Sell land 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.

Answer 1

VIDEO PHONES
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 ;
Depreciation expense	$      34,000
Loss on sale of land	$        8,700
Increase in accounts receivable	$   (21,700)
Decrease in inventories	$      37,000
Increase in prepaid rent	$      (6,840)
Decrease in accounts payable	$   (15,700)
Decrease in Interest payable	$      (4,700)
Increase in income tax payable	$        1,000
Net cash provided by operating activities		$ 173,560
Cash flows from investing activities
Cash paid for purchase of investment in bonds	$ (112,000)
Cash received from sale of land	$      28,300
Net cash used by investing activities		$ (83,700)
Cash flows from financing activities
Cash paid for dividends	$   (28,500)
Net cash used by financing activities		$ (28,500)
Net Increase in cash and cash equivalents		$    61,360
Cash and cash equivalents at beginning of period		$ 202,660
Cash and cash equivalents at end of period		$ 264,020
Non cash investing and financing activities
Acqusition of equipment by issuing note payable		$    67,000

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