The income statement, balance sheet, and additional information for Video Phones
ID: 2466616 • Letter: T
Question
The income statement, balance sheet, and additional information for Video Phones, Inc., are provided.
VIDEO PHONES, INC.
Income Statement
For the Year Ended December 31, 2015
Net sales
$
3,136,000
Expenses:
Cost of goods sold
$ 2,050,000
Operating expenses
878,000
Depreciation expense
29,000
Loss on sale of land
8,200
Interest expense
16,000
Income tax expense
50,000
Total expenses
3,031,200
Net income
$
104,800
VIDEO PHONES, INC.
Balance Sheet
December 31
2015
2014
Assets
Current assets:
Cash
$
179,720
$
160,760
Accounts receivable
83,200
62,000
Inventory
105,000
137,000
Prepaid rent
12,480
6,240
Long-term assets:
Investments
107,000
0
Land
212,000
244,000
Equipment
274,000
212,000
Accumulated depreciation
(71,400)
(42,400)
Total assets
$
902,000
$
779,600
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
67,800
$
83,000
Interest payable
6,200
10,400
Income tax payable
15,200
14,200
Long-term liabilities:
Notes payable
289,000
227,000
Stockholders' equity:
Common stock
320,000
320,000
Retained earnings
203,800
125,000
Total liabilities and stockholders’ equity
$
902,000
$
779,600
Additional Information for 2015:
1.
Purchase investment in bonds for $107,000.
2.
Sell land costing $32,000 for only $23,800, resulting in a $8,200 loss on sale of land.
3.
Purchase $62,000 in equipment by borrowing $62,000 with a note payable due in three years. No cash is exchanged in the transaction.
4.
Declare and pay a cash dividend of $26,000.
Required:
Prepare the statement of cash flows for Video Phones, Inc., using the direct method. Disclose any noncash transactions in an accompanying note.
The income statement, balance sheet, and additional information for Video Phones, Inc., are provided.
Explanation / Answer
the statement of cash flows for Video Phones
for the year ended 31.December,2015
cash flow from operating activity($)
net sale 3136000
less: cost of goods sold 2050000
less: operating expenses 878000
Add: cash receipt of inventory 32000
less: cash payment of advance rent 6240
less: cash payment accounts payable 15200
less: cash payment from accounts receivable 21200
less: interest payment (10400+16000 -6200) 20200
less: income tax ( 14200+50000 - 15200) 49000
Net cash flow from operating activity 128160
cash flow from investing activity
purchase of investment - 107000
sale of land 23800
Net cash used in investing activity -83200
cash flow from financing activity
dividend -26000
Net cash used in financial activity -26000
Net increase in cash and cash equivalent 18960
add: opening cash and cash equivalent 160760
closing cash and cash equivalent 179720
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