Based on the Information in the Following Income Statement and Balance

question 168

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.
Monterey Corporation Income Statement
For Year Ended December 31, 20X2

$$\begin{array} { | l | l | l | } \hline \text { Sales } & & \$ 504,000 \\\hline \text { Cost of goods sold } & 327,600 & \\\hline \text { Depreciation } & 42,000 & \\\hline \text { Other operating expenses } & 125,500 & ( 495,100 \\\hline \text { Other gains (losses): } & & \\\hline \text { Gain on sgle of equipment } & & 7,200 \\\hline \text { Income before taxes } & & 16,100 \\\hline \text { Income tax expense } & & ( 4,800 \\\hline \text { Net income } & & \$ 11,300 \\\hline & &\end{array}$$

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Definitions:

Allocation

The process of distributing resources or tasks among people or groups based on a specific criteria.

Efficient Industries

Industries that achieve maximum productivity with minimum wasted effort or expense.

Comparative Advantage

The ability of an individual, company, or country to produce a good or service at a lower opportunity cost than competitors, leading to more efficient global production and trade.

Consumer Market

A marketplace for goods and services that are purchased for personal, family, or household use.