Using the data presented for Pesci Ltd. in E17-4, prepare the operating activities section of the cash flow statement using the direct method.

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PESCI LTD Income Statement Year Ended November 30, 2017 $948,000 490,000 458,000 Cost of goods sold Gross profit Operating expenses Depreciation expense Gain on sale of equipment Profit before income tax Income tax expense Profit $310,000 50,000 (10,000) 350,000 108,000 30,000 78,000 Changes in current assets and current liabilities were as follows: Accounts receivable Inventory Prepaid expenses Accounts payable Dividends payable Income taxes payable decrease $36,000 19,000 2,000 12,000 5,000 4,000 decrease decrease decrease