ABC COMPANY

INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER $31,$ Year $2$

Sales revenue $$6,900,000$

Cost of goods sold $$1,900,000$

Beginning inventory $4,400,000$

Purchases $6,300,000$

Goods available for sale $1,600,000$

Ending inventory $4,700,000$

Cost of goods sold $2,200,000$

Gross profit

Operating expenses:

Selling expenses $450,000$

Administrative expenses $700,0001,150,000$

Net income $$1,050,000$

Additional information:

$1.$ Inventory decreased $$300,000$ during the year.

$2.$ Accounts receivable decreased $$310,000$ during the year.

$3.$ Prepaid expenses increased $$170,000$ during the year.

$4.$ Accounts payable to suppliers of merchandise decreased $$275,000$ during the year.

$5.$ Accrued expenses payable decreased $$120,000$ during the year.

$6.$ Administrative expenses include depreciation expense of $$60,000$

Required:

Prepare the operating activities section of the statement of cash flows for the year ended December $31,$Year $2$ for the ABC Company, using the INDIRECT method.