Question

Required: Prepare the operating activities section of the statem using the indirect method. Prepare a statement of cash flows-Indirect method (LO11-2, 11-3, 11-4, 11-5) 11-4A 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 $3,636,000 Net sales Expenses: Cost of goods sold Operating expenses Depreciation expense Loss on sale of land Interest expense Income tax expense Total expenses Net income $2,450,000 958,000 37,000 9,000 20,000 58,000 3,532.000 $ 104,000 VIDEO PHONES, INC. Balance Sheets December 31 2021 2020 Assets Current assets: Cash Accounts receivable Inventory Prepaid rent Long-term assets: Investments Land Equipment Accumulated depreciation Total assets $ 254,600 92,000 105,000 14,400 $227.800 70,000 145,000 7,200 115,000 220,000 290,000 (81,000 $1,010,000 260,000 220,000 (44,000) $886,000 (continued)

Answer 1

Cash flow from Operating activities	Amount(in $)
Net Income	1,04,000
Add:Depreciation expenses	37,000
Add:Loss on sale of land	9,000
Cash flow before adjustment of working capital items	1,50,000
Less:Increase in Accounts Receivable	(22,000)
Add:Decrease in Inventory	40,000
Less:Increase in Prepaid Rent	(7,200)
Less:Decrease in accounts payable	(16,000)
Less:Decrease in Interest payable	(5,000)
Add:Increase in Income tax payable	1,000
Net Cash flow from Operating activities(A)	1,40,800
Cash flow from Investing activities
Sale of Land	31,000
Investment in Bonds	(1,15,000)
Cash flow from Investing activities(B)	(84,000)
Cash flow from Financing activities
Cash dividend paid	-$30,000
Cash flow from Financing activities(C)	-$30,000
Net Change in cash(A+B+C)	$26,800
Cash at Beginning of year	$2,27,800
Cash at end of year	$2,54,600