Question

Problem 11-7A Calculate operating activities--direct method (LO11-4, 11-5, 11-7) The incc ne 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 $ 2,636,000 Expenses: Cost of goods sold $1,600,000 Operating expenses 788,000 Depreciation expense 20,000 Loss on sale of land 7,300 Interest expense 11,500 Income tax expense 41,000 Total expenses 2,467,800 Net income $ 168,200

Answer 1

Statement of Cash Flows (Direct Method )
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Cash flows from operating activities
Cash receipts from customers	$    26,15,700
Cash paid to suppliers	$ -15,91,300
Cash paid to operating exp.	$    -7,92,560
Cash paid for income tax	$       -40,000
Cash paid for interest	$       -14,800
Net cash from operating activities		$   1,77,040
Cash flows from investing activities
Investment in Bonds	$       -98,000
Purchase of Equipment
Sale of land	$         15,700
Net cash used in investing activities		$     -82,300
Cash flows from financing activities
Bonds Payable
Common Shares Issued
Cash Dividend Paid	$       -21,500
Net cash used in financing activities		$     -21,500
Net increase in cash and cash equivalents		$      73,240
Cash and cash equivalents at beginning of period		$      85,940
Cash and cash equivalents at end of period		$   1,59,180
Working notes: 1
Calculation of cash collection from customer
Sales	$        26,36,000
Add: Opening AR	$              53,000
Less: Closing AR	$              73,300
Cash Collected	$        26,15,700
Working notes: 2
Calculation of purhcase of inventory
Cost of Goods Sold	$        16,00,000
Add: Closing inventory	$           1,05,000
Less : Opening Inventory	$           1,28,000
Material Purhcased	$        15,77,000
Calculation of amount paid to supplied
Op. Balance of Acct Payabl e	$              74,000
Add: Purchases	$        15,77,000
Less: Cl. Balance of Account payable	$              59,700
Cash paid	$        15,91,300