The following information pertains to Peak Heights Company: Income Statement for Current Year

Sales $85,900
Expenses Cost of goods sold $51,675
Depreciation expense 6,700
Salaries expense 11,900 70,275
Net income $15,625

Partial Balance Sheet Current year Prior year
Accounts receivable $9,800 $14,200
Inventory 13,100 9,100
Salaries payable 1,620 870

Required:
Present the operating activities section of the statement of cash flows for Peak Heights Company using the indirect method.

Peak Heights Company

PEAK HEIGHTS COMPANY

Statement of Cash Flows

Operating Activities Section

Net income                                             $15,625

Non-cash flow: Depreciation                    6,700

Changes in working capital:

Accounts receivable                              -$4,400

Inventory                                                   4,000

Salaries payable                                          750

Net cash from operating activities     $22,675

Explanation:

A) Data and Calculations:

Peak Heights Company:

Income Statement for Current Year

Sales                                                        $85,900

Expenses Cost of goods sold $51,675

Depreciation expense                6,700

Salaries expense                       11,900    70,275

Net income                                             $15,625

Partial Balance Sheet   Current year   Prior year    Changes

Accounts receivable         $9,800         $14,200     -$4,400

Inventory                             13,100             9,100         4,000

Salaries payable                  1,620                870            750

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