Following are the Income statement and other information for Castle Cellars Corporation.

Castle CellarsCorporation

Income Statement For the Year Ended

December 31, 2020

Sales $3,000

Cost of goods sold 1,500

Gross margin $1,500

Operating expenses $600

Depreciation expense 300 900

Income before income taxes 600

Income taxes expense 150

Net income 450

The following other information is also given to you:

Accounts receivable (net) decreased by $750 during the year.

Inventory increased by $450, and Accounts Payable decreased by $600 during the

year.

Income Taxes Payable increased by $150 during the year.

1. Determine the adjusted net income to be calculated for cash flow purposes

2. Determine the cash flows from operating activities.