Based on the following income statement and balance sheet for Montego

Question

Based on the following income statement and balance sheet for Montego Bay Corporation, determine the cash flows from operating activities using the direct method.

MONTEGO BAY CORPORATION Income Statement For Year Ended December 31, 2013
Sales		$504,000
Cost of goods sold	327,600
Depreciation	42,000
Other operating expenses	125,500	(495,100)
Other gains (losses):
Gain on sale of equipment		7,200
Income before taxes		16,100
Income tax expense		(4,800)
Net income		$ 11,300

MONTEGO BAY CORPORATION Balance Sheets At December 31
	2013	2012
Cash	$64,650	$55,800
Accounts receivable	21,000	29,000
Inventory	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	$24,900
Equity:
Common stock	$106,000	$106,000
CC in excess	18,000	18,000
Retained earnings	124,200	114,000
Total equity	$248,200	$238,000
Total liabilities and equity	$277,650	$262,900