How are the Balance Sheet and Income Statement related? Discuss the

pattern of information flow between these two documents.

Given the data shown in Tables P$2\mathrm{.}7$a and P$2\mathrm{.}7$b for Pegasus Interna$-$

tional, Inc., what method of accounting is being used? How has the

working capital of Pegasus International changed from $20$X$4$ to $20$X$5?$

Interpret this development considering the increase in revenue from

$204$ to $205$