Reporting Cash Flows from Operating Activities (Indirect Method) – The following information pertains to Satellite Company:

Income Statement for 2012

Sales

$85,000

Expenses

Cost of goods sold

$51,875

Depreciation expense

8,500

Salaries expense

12,000

72,375

Net income

$12,625

Partial Balance Sheet

2012

2011

Accounts receivable

$10,500

$12,000

Inventory

14,000

8,000

Salaries payable

1,750

800

Required:

Present the operating activities section of the statement of cash flows for Satellite Company using the indirect method.