XYZ Corp ncome Statement For the year ended December 31, 2010 Sales Cost of goods sold Gross profit Operating expenses $ 5,000,000 1,600,000 400,000 500,000 Selling expenses Administrative expenses Operating income Interest expense Income tax expense Net Income 700,000 12,000 $ 648,000 ADDITIONAL INFORMATION 1. Accounts receivable decreased $400,000 during the year. 2. Prepaid expenses decreased $160,000 during the year 3. Accounts payable to suppliers of merchandise decreased $150,000 during the year. 4. Inventory increased $350,000 during the year 5. Accrued expenses payable decreased $150,000 during the year 6. Administrative expenses include depreciation expense of $90,000 Required : Prepare the Operating Activities section of Statement of Cash Flows using the Direct method