80.2K

Verified Solution

Link Copied!

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		$	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 Sheet December 31
	2018		2017
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 2018: 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 borrowing $69,000 with a note payable due in three years. No cash is exchanged in the transaction. 4. Declare and pay a cash dividend of $29,500.

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.)

Answer & Explanation Solved by verified expert

See Answer