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 $ 3,386,000 Expenses: Cost of goods sold $ 2,200,000 Operating expenses 908,000 Depreciation expense 32,000 Loss on sale of land 8,500 Interest expense 17,500 Income tax expense 53,000 Total expenses 3,219,000 Net income $ 167,000 VIDEO PHONES, INC. Balance Sheets December 31 2021 2020 Assets Current assets: Cash $ 270,300 $ 185,900 Accounts receivable 86,500 65,000 Inventory 105,000 140,000 Prepaid rent 13,200 6,600 Long-term assets: Investments 110,000 0 Land 215,000 250,000 Equipment 280,000 215,000 Accumulated depreciation (75,000 ) (43,000 ) Total assets $ 1,005,000 $ 819,500 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 70,500 $ 86,000 Interest payable 6,500 11,000 Income tax payable 15,500 14,500 Long-term liabilities: Notes payable 295,000 230,000 Stockholders' equity: Common stock 350,000 350,000 Retained earnings 267,500 128,000 Total liabilities and stockholders’ equity $ 1,005,000 $ 819,500 Additional Information for 2021: Purchase investment in bonds for $110,000. Sell land costing $35,000 for only $26,500, resulting in a $8,500 loss on sale of land. Purchase $65,000 in equipment by issuing a $65,000 long-term note payable to the seller. No cash is exchanged in the transaction. Declare and pay a cash dividend of $27,500. 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.)

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 $ 3,386,000 Expenses: Cost of goods sold $ 2,200,000 Operating expenses 908,000 Depreciation expense 32,000 Loss on sale of land 8,500 Interest expense 17,500 Income tax expense 53,000 Total expenses 3,219,000 Net income $ 167,000 VIDEO PHONES, INC. Balance Sheets December 31 2021 2020 Assets Current assets: Cash $ 270,300 $ 185,900 Accounts receivable 86,500 65,000 Inventory 105,000 140,000 Prepaid rent 13,200 6,600 Long-term assets: Investments 110,000 0 Land 215,000 250,000 Equipment 280,000 215,000 Accumulated depreciation (75,000 ) (43,000 ) Total assets $ 1,005,000 $ 819,500 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 70,500 $ 86,000 Interest payable 6,500 11,000 Income tax payable 15,500 14,500 Long-term liabilities: Notes payable 295,000 230,000 Stockholders' equity: Common stock 350,000 350,000 Retained earnings 267,500 128,000 Total liabilities and stockholders’ equity $ 1,005,000 $ 819,500 Additional Information for 2021: Purchase investment in bonds for $110,000. Sell land costing $35,000 for only $26,500, resulting in a $8,500 loss on sale of land. Purchase $65,000 in equipment by issuing a $65,000 long-term note payable to the seller. No cash is exchanged in the transaction. Declare and pay a cash dividend of $27,500. 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.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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			$	3,386,000
Expenses:
Cost of goods sold	$	2,200,000
Operating expenses		908,000
Depreciation expense		32,000
Loss on sale of land		8,500
Interest expense		17,500
Income tax expense		53,000
Total expenses				3,219,000
Net income			$	167,000

VIDEO PHONES, INC.
Balance Sheets
December 31
	2021		2020
Assets
Current assets:
Cash	$	270,300		$	185,900
Accounts receivable		86,500			65,000
Inventory		105,000			140,000
Prepaid rent		13,200			6,600
Long-term assets:
Investments		110,000			0
Land		215,000			250,000
Equipment		280,000			215,000
Accumulated depreciation		(75,000	)		(43,000	)
Total assets	$	1,005,000		$	819,500
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	70,500		$	86,000
Interest payable		6,500			11,000
Income tax payable		15,500			14,500
Long-term liabilities:
Notes payable		295,000			230,000
Stockholders' equity:
Common stock		350,000			350,000
Retained earnings		267,500			128,000
Total liabilities and stockholders’ equity	$	1,005,000		$	819,500

Additional Information for 2021:

Purchase investment in bonds for $110,000.
Sell land costing $35,000 for only $26,500, resulting in a $8,500 loss on sale of land.
Purchase $65,000 in equipment by issuing a $65,000 long-term note payable to the seller. No cash is exchanged in the transaction.
Declare and pay a cash dividend of $27,500.

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.)

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