Exercise 23-4 The income statement of Waterway Company is shown below. WATERWAY COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenue $6,920,000 Cost of goods sold Beginning inventory $1,880,000 Purchases 4,360,000 Goods available for sale 6,240,000 Ending inventory 1,600,000 Cost of goods sold 4,640,000 Gross profit 2,280,000 Operating expenses Selling expenses 440,000 Administrative expenses 710,000 Net income 1,150,000 $1,130,000 Additional information: 1. Accounts receivable decreased $380,000 during the year. 2. Prepaid expenses increased $150,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $270,000 during the year. 4. Accrued expenses payable decreased $110,000 during the year. 5. Administrative expenses include depreciation expense of $50,000. Prepare the operating activities section of the statement of cash flows using the direct method. WATERWAY COMPANY Statement of Cash Flows (Partial) +A $