Ayayai Company's income statement for the year ended December 31, 2020, contained the following condensed information.

Service revenue $831,000

Operating expenses (excluding depreciation) $620,000

Depreciation expense 60,000

Loss on sale of equipment 26,000 706,000

Income before income taxes 125,000

Income tax expense 40,000

Net income $85,000

Ayayai's balance sheet contained the following comparative data at December 31.

2020 2019

Accounts receivable $37,000 $52,000

Accounts payable 41,000 31,000

Income taxes payable 4,100 8,500

(Accounts payable pertains to operating expenses.)

the operating activities section of the statement of cash flows using the direct method.

AYAYAI COMPANY

Statement of Cash Flows (Partial)

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