Based on the Information in the Following Income Statement and Balance

question 225

Essay

Based on the information in the following income statement and balance sheet for Monterey Corporation,determine the cash flows from operating activities using the direct method.
$\begin{array}{c}\text {Monterey Corporation}\\\text { Income Statement }\\\text {For Year Ended December \( 31,20 \mathrm{X} 2 \)}\\\begin{array}{|l|l|l|}\hline \text { Sales } & & \$ 504,000 \\\hline \text { Cost of goods sold } & 327,600 & \\\hline \text { Depreciation } & 42,000 & \\\hline \text { Other operating expenses } & 125,500 & (495,100) \\\hline \text { Other gains (losses): } & & \\\hline \text { Gain on sale of equipment } & & 7,200 \\\hline \text { Income before taxes } & & 16,100 \\\hline \text { Income tax expense } & & (4,800) \\\hline \text { Net income } & & \$ 11,300 \\\hline\end{array}\end{array}$

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