Quitzau’s Supplies Inc.’s income statement for the year ended December 31, 2014, follows:

Quitzau’s Supplies Inc.
Income Statement
Year Ended December 31, 2014
Sales ................................................................................................................. $1,000,000
Cost of goods sold                                                                                                                  

Beginning inventory ..............................................................   $500,000
Purchases ...............................................................................     400,000
Cost of goods available for sale ............................................    900,000
Ending inventory .....................................................................    300,000

Cost of goods sold ...............................................................................................    600,000
Gross profit ...........................................................................................................    400,000
Operating expenses .............................................................................................    200,000
Interest expense ...................................................................................................      10,000
Amortization and depreciation expense ...........................................................     30,000
Income before income taxes ..............................................................................     160,000
Income tax expense ..............................................................................................       40,000
Net income .............................................................................................................  $ 120,000

Additional information:

• Accounts receivable decreased $20,000 during the year.
• Accounts payable increased $15,000 during the year.
• Prepaid expenses increased $5,000 during the year.
• Income taxes payable decreased $3,000 during the year.
• Accrued interest payable increased $2,000 during the year.
• Quitzau has adopted a policy of reporting the cash flows arising from the receipt and payment of dividends and interest as an operating activity.

Required:
Prepare the operating section of Quitzau’s statement of cash flows for the year ended December 31, 2014, using the direct method.