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

SHEFFIELD COMPANY

Statement of Cash Flows $($Partial$)$

For the Year Ended December $31,2025$

$ The income statement of Sheffield Company is shown below.

SHEFFIELD COMPANY

INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER $31,2025$

Sales $$788,000$

Cost of goods sold $544,000$

Gross profit $244,000$

Operating expenses

Selling expenses $$50,000$

Administrative expenses $89,000139,000$

Net income $$105,000$

Additional information:

$1.$ Accounts receivable decreased $$66,000$ during the year.

$2.$ Inventory increased $$36,000$ during the year.

$3.$ Prepaid expenses increased $$11,000$ during the year.

$4.$ Accounts payable increased $$25,000$ during the year.

$5.$ Accrued expenses payable increased $$6,000$ during the year.

$6.$ Administrative expenses include depreciation expense of $$19,000$