Based on the Information in the Following Income Statement and Balance

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.
$\begin{array} { c } \text { Monterey Corporation } \\\text { Income Statement }\\ { \text { For Year Ended December 31, 20X2 } } \\ \begin{array} { | l | l | l | } \hline \text { Sales } & & \$504,000\\\hline \text { Cost of goods sold } & 327,600& \\\hline \text { Depreciation } & 42,000& \\\hline \text { Other operating expenses } &\underline{125,500} &(495,100) \\\hline \text { Other gains (losses): } & & \\\hline \text { Gain on sale of equipment } & & \underline{7,200}\\\hline \text { Income before taxes } & &16,100 \\\hline \text { Income tax expense } & &\underline{(4,800) }\\\hline \text { Net income } & & \underline{\$11,300}\\\hline &\\\hline\end{array}\end{array}$ $\begin{array}{c}\text {Monterey Corporation}\\\text {Balance Sheets}\\\text {At December 31}\\ \begin{array}{|l|l|l|}\hline& 20 \mathrm{X} 2 & 20 \mathrm{X} 1 \\\hline \text { Cash } & \$ 64,650 & \$ 55,800 \\ \hline \text { Accounts receivable } & 21,000 & 29,000 \\\hline \text { Inventory } & 58,000 & 52,100 \\\hline \text { Equipment }& 440,000 & 222,000 \\\hline\text { Accumulated depreciation } &\underline{ (106,000)} & \underline{(96,000)} \\\hline \text { Total assets } & \underline{\$ 277,650 }&\underline{ \$ 262,900 }\\\hline\\\hline \text { Liabilities: } & & \\\hline \text { Accounts payable } & \$ 28,400 & \$ 23,700 \\\hline \text { Income taxes payable } &1,050 & 1,200 \\\hline \text { Total liabilities } & \$ 29,450 & \$ 24,900 \\\hline \text { Equity: } & \\\hline \text { Common stock } & \$ 106,000 & \$ 106,000 \\\hline \text { Paid-in Capital in Excess of Par.......... } & 18,000 & 18,000 \\\hline \text { Retained earnings } &\underline{124,000}&\underline{114,000} \\\hline \text { Total equity } & \underline{\$ 248,200 }&\underline{ \$ 238,000 }\\\hline \text { Total liabilities and equity } & \underline{\$ 277,650 }&\underline{ \$ 262,900} \\\hline\end{array}\end{array}$