Duggan Company reported net income of $195,000 for 2006. Duggan also reported de- Prepare the operating activities preciation expense of $25,000, and a loss of $5,000 on the sale of equipment. The comparative section—indirect method.

balance sheets show an increase in accounts receivable of $15,000 for the year, an $8,000 in- (SO 3)

crease in accounts payable, and a decrease in prepaid expenses of $7,000.

Instructions Prepare the operating activities section of the statement of cash flows for 2006 using the indirect method.