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 CorporationIncome StatementFor Year Ended December 31, Year 2Sales? $ 504,000Cost of goods sold 327,600 ?Depreciation 42,000 ?Other operating expenses 125,500 (495,100)Other gains (losses):?? Gain on sale of equipment? 7,200Income before taxes? 16,100Income tax expense? (4,800)Net income? $ 11,300Monterey CorporationBalance SheetsAt December 31? Year 2Year 1Cash $64,650 $55,800Accounts receivable 21,000 29,000Inventory 58,000 52,100 Equipment 240,000 222,000 Accumulated depreciation (106,000)
(96,000)Total assets $277,650 $262,900??? Liabilities:?? Accounts payable $28,400 $23,700 Income taxes payable 1,050 1,200 Total liabilities $29,450 $24,900Equity:?? Common stock $106,000 $106,000 Paid-in Capital in Excess of Par 18,000 18,000 Retained earnings 124,200 114,000 Total equity $248,200 $238,000Total liabilities and equity $277,650 $262,900
What will be an ideal response?
| Monterey Corporation Cash flows from operating activities (direct method) For Year Ended December 31, Year 2 | |||
| ? | Cash flows from operations: | ? | ? |
| ? | Cash received from customers | $512,000 | (a) |
| ? | Cash paid for merchandise | (328,800) | (b) |
| ? | Cash paid for operating expenses | (125,500) | Given |
| ? | Cash paid for income taxes | (4,950) | (c) |
| ? | Net cash provided by operations | $ 52,750 | ? |
| (a) | Sale | $504,000 |
| ? | Decrease in accounts receivable | 8,000 |
| ? | Cash collected from customers | $512,000 |
| ? | ? | ? |
| (b) | Cost of goods sold | $327,600 |
| ? | Increase in merchandise inventory | 5,900 |
| ? | Purchases of merchandise | 333,500 |
| ? | Increase in accounts payable | (4,700) |
| ? | Cash paid for merchandise | $328,800 |
| ? | ? | ? |
| (c) | Income taxes expense | $ 4,800 |
| ? | Decrease in income taxes payable | 150 |
| ? | Cash paid for income taxes | $ 4,950 |
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