2) The income statement of DEF Company is shown below.

DEF CompanyIncome Statement For the Year Ended December 31, 2020

Sales revenue $6,900,000

Cost of goods sold

Beginning inventory $1,900,000

Purchases 4,400,000

Goods available for sale 6,300,000

Ending inventory 1,600,000C

Cost of goods sold 4,700,000

Gross profit 2,200,000

Operating expenses

Selling expenses 450,000

Administrative expenses 700,000

1,150,000

Net income$1,050,000

Additional information:

1. Accounts receivable decreased $360,000 during the year.

2. Prepaid expenses increased $170,000 during the year.

3. Accounts payable to suppliers of merchandise decreased $275,000 during the year

.4. Accrued expenses payable decreased $100,000 during the year.

5. Administrative expenses include depreciation expense of $60,000.