Answer:
                       Statement of Cash Flows (partial)
<u>Cash flows from operating activities
</u>
Net income                                                           $481,540
Adjustments to reconcile net income to 
net cash provided by operating activities
<u>Income statement items not affecting cash</u>
Depreciation expense                   $44,200
Gain on sale of equipment           -$6,200
Amortization expenses–Patents   $4200
<u>Changes in current operating </u>
<u>assets and liabilities
</u>
Decrease in accounts payable    -$12,500
Decrease in salaries payable       -$3,500
Increase in accounts receivable  -$30,500
Increase in Inventory                    -$25,000
Net changes                                                          -<u>$29,300</u>
Cash flows from operating activities                  <u>$452,240</u>