12-7 Reporting Cash Flows from Operating Activities (Indirect Method) LO12-2 The following information pertains to Peak Heights Company: Income Statement for Current Year Sales $ 86,700 Expenses Cost of goods sold $ 51,775 Depreciation expense 7,400 Salaries expense 11,900 71,075 Net income $ 15,625 Partial Balance Sheet Current year Prior year Accounts receivable $ 11,000 $ 13,800 Inventory 13,000 9,800 Salaries payable 1,710 860 Required: Present the operating activities section of the statement of cash flows for Peak Heights Company using the indirect method.

Brian has just finished college. he wants to set up a small business to make and sell fireworks. he registers his company and acquires a license from the government. he finds that most of his competitors are selling fireworks at an extremely low price. he would like to make more money, so he decides to innovate and develop better fireworks. he sells his fireworks at a higher price, and they are a huge hit with the customers. after a few years, he earns enough profit to set up a bigger fireworks factory that complies with the government’s health and safety regulations. he even starts exporting fireworks overseas. which type of economy does this scenario describe?