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.

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