The income statement of Muscat Port Trade Company is presented below.

Additional information:

1. Accounts receivable decreased 230,000 during the year, and inventory increased 120,000.

2. Prepaid expenses increased 125,000 during the year.

3. Accounts payable to merchandise suppliers increased 50,000 during the year.

4. Accrued expenses payable increased 155,000 during the year.

Muscat Port Trade Company

Income Statement

For the Year Ended December 31, 2016

Service revenue 5,250,000

Cost of goods sold

Beginning inventory 1,780,000

Purchases 3,430,000

Goods available for sale 5,210,000

Ending inventory 1,900,000

Total cost of goods sold 3,310,000

Gross profit 1,940,000

Operating expenses

Depreciation expense 95,000

Amortization expense 20,000

Other expenses 945,000 1,060,000

Net income 880,000

INSTRUCTIONS:

Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2016, for Muscat Port Trade Company, using the indirect method.