Reference no: EM132629197

The income statement of Stewart Limited is shown below:

STEWART LIMITED

Income Statement

Year Ended December 31, 2021

Sales                            $ 9,000,000

Cost of goods sold?            5,400,000

Gross profit?                      3,600,000

Operating expenses

Selling and administrative expenses   $ 1,400,000

Depreciation expense 120,000 1,520,000

Profit                             $ 2,080,000

Additional information:

1. Accounts receivable decreased $300,000 during the year.

2. Inventory decreased $175,000 during the year.

3. Prepaid expenses increased $200,000 during the year.

4. Accounts payable to merchandise suppliers increased $160,000 during the year.

5. Accrued expenses payable increased $120,000 during the year.

Question 1: How do the operating activities section of the cash flow statement for the year ended December 31, 2021, for Stewart Limited, using the direct method.