Reference no: EM132727025

Ayayai Company's income statement for the year ended December 31,2020, contained the following condensed information.

Service revenue $831,000
Operating expenses (excluding depreciation) $620,000
Depreciation expense 60,000
Loss on sale of equipment 26,000 706,000
Income before income taxes 125,000
Income tax expense 40,000
Net income $85,000

Ayayai's balance sheet contained the following comparative data at December 31.

                                                    2020               2019

Accounts receivable             $37,000        $52,000
Accounts payable              41,000               31,000
Income taxes payable            4,100               8,500

Problem 1: Determine the operating activities section of the statement of cash flows using the direct method.