Question

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				$	3,586,000
Expenses:
Cost of goods sold	$	2,400,000
Operating expenses		948,000
Depreciation expense		36,000
Loss on sale of land		8,900
Interest expense		19,500
Income tax expense		57,000
Total expenses					3,469,400
Net income				$	116,600

VIDEO PHONES, INC.
Balance Sheets
December 31
	2021				2020
Assets
Current assets:
Cash	$	257,740			$	219,420
Accounts receivable		90,900				69,000
Inventory		105,000				144,000
Prepaid rent		14,160				7,080
Long-term assets:
Investments		114,000				0
Land		219,000				258,000
Equipment		288,000				219,000
Accumulated depreciation		(79,800	)			(43,800	)
Total assets	$	1,009,000			$	872,700
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	74,100			$	90,000
Interest payable		6,900				11,800
Income tax payable		15,900				14,900
Long-term liabilities:
Notes payable		303,000				234,000
Stockholders' equity:
Common stock		390,000				390,000
Retained earnings		219,100				132,000
Total liabilities and stockholders’ equity	$	1,009,000			$	872,700

Additional Information for 2021:

1. Purchase investment in bonds for $114,000.
2. Sell land costing $39,000 for only $30,100, resulting in a $8,900 loss on sale of land.
3. Purchase $69,000 in equipment by issuing a $69,000 long-term note payable to the seller. No cash is exchanged in the transaction.
4. Declare and pay a cash dividend of $29,500.

Required:

Prepare the statement of cash flows for Video Phones, Inc., using the direct method. Disclose any noncash transactions in an accompanying note.

Answer 1