Question: Set up : the operating activities section of the statement of cash flows using the direct method.

The income statement of ABC Company is shown below.

ABC COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017
Sales revenue				$6,960,000
Cost of goods sold
Beginning inventory		$1,910,000
Purchases		4,380,000
Goods available for sale		6,290,000
Ending inventory		1,610,000
Cost of goods sold				4,680,000
Gross profit				2,280,000
Operating expenses
Selling expenses		450,000
Administrative expenses		710,000		1,160,000
Net income				$1,120,000

Additional information:

1.		Accounts receivable decreased $380,000 during the year.
2.		Prepaid expenses increased $190,000 during the year.
3.		Accounts payable to suppliers of merchandise decreased $290,000 during the year.
4.		Accrued expenses payable decreased $90,000 during the year.
5.		Administrative expenses include depreciation expense of $70,000.