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:
a. Prepare the statement of cash flows for Video Phones, Inc., using the direct method. Disclose any noncash transactions in an accompanying note.

Answer 1

Answer:

Net increase in cash position is $18,960

From operations $128,160

From investing activities -$83,200

From Finance activities -$26,000

Explanation:

The income statement has been uploaded for your benefit.

The schedules attached tagged "workings" explains how we arrived at each change in cash flow by line item.

Answer 2

The cash flow statement is one of the most important forms of the financial statement being prepared at the end of the financial period to record the inflow and outflow of the cash by various business activities. It can be prepared either by direct or indirect method.

It bifurcates the transactions into three activities: Operating activity, investing activity, and financing activity.

The cash flow statement by the direct method is attached below in the image.

To know more about cash flow statements, refer to the link:

https://brainly.com/question/2693044