The income statement, balance sheet, and additional information for Video Phones
ID: 2467104 • Letter: T
Question
The income statement, balance sheet, and additional information for Video Phones, Inc., are provided.
Purchase $66,000 in equipment by borrowing $66,000 with a note payable due in three years. No cash is exchanged in the transaction.
Prepare the statement of cash flows for Video Phones, Inc., using the direct method. Disclose any noncash transactions in an accompanying note.
VIDEO PHONES, INC.Income Statement
For the Year Ended December 31, 2015 Net sales $ 3,436,000 Expenses: Cost of goods sold $ 2,250,000 Operating expenses 918,000 Depreciation expense 33,000 Loss on sale of land 8,600 Interest expense 18,000 Income tax expense 54,000 Total expenses 3,281,600 Net income $ 154,400
Explanation / Answer
VIDEO PHONES INC
Statement of Cash Flows
For the Year ended December 31 2015
Cash Flows from Operating Activities
Net Sales
$3436000
Less Increase in Accounts Receivables
$ 21600
Cash Collections
$3414400
Cost of Goods Sold
$2250000
Less Decrease in Inventories
-$36000
Add Increase In Accounts payables
$15600
Cash Payment for Purchases
-$2229600
Operating Expenses
$918000
Add Prepaid rent
$6720
Cash Paid for Operating Expenses
-$924720
Interest Expenses
$18000
Add Decrease in Interest Payable
$4600
Cash Interest
-$22600
Income Tax Expenses
$54000
Less Increase in Income tax payable
$1000
Cash Payment for income taxes
-$53000
Dividend Paid
-$28000
Net Cash Flow from Operating Activities
$156480
Cash Flows from Investing Activities
Purchase of Bonds
-$111000
Sale of land
$27400
Purchase of Equipments
-$66000
Net Cash Flow from Investing Activities
-149600
Cash Flow from Financing Activities
Increase in notes payable
$66000
Net Cash flow from Financing Activities
$66000
Cash at the beginning of the period
$194280
Cash at the end of the period
$267160
Note: non Cash Activities
VIDEO PHONES INC
Statement of Cash Flows
For the Year ended December 31 2015
Cash Flows from Operating Activities
Net Sales
$3436000
Less Increase in Accounts Receivables
$ 21600
Cash Collections
$3414400
Cost of Goods Sold
$2250000
Less Decrease in Inventories
-$36000
Add Increase In Accounts payables
$15600
Cash Payment for Purchases
-$2229600
Operating Expenses
$918000
Add Prepaid rent
$6720
Cash Paid for Operating Expenses
-$924720
Interest Expenses
$18000
Add Decrease in Interest Payable
$4600
Cash Interest
-$22600
Income Tax Expenses
$54000
Less Increase in Income tax payable
$1000
Cash Payment for income taxes
-$53000
Dividend Paid
-$28000
Net Cash Flow from Operating Activities
$156480
Cash Flows from Investing Activities
Purchase of Bonds
-$111000
Sale of land
$27400
Purchase of Equipments
-$66000
Net Cash Flow from Investing Activities
-149600
Cash Flow from Financing Activities
Increase in notes payable
$66000
Net Cash flow from Financing Activities
$66000
Cash at the beginning of the period
$194280
Cash at the end of the period
$267160
Note: non Cash Activities
- Depreciation $33000
- Loss on Sale of Land $8600
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