Question

The income statement of Waterway Company is shown below.

WATERWAY COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020
Sales revenue				$6,210,000
Cost of goods sold
Beginning inventory		$2,070,000
Purchases		4,570,000
Goods available for sale		6,640,000
Ending inventory		1,490,000
Cost of goods sold				5,150,000
Gross profit				1,060,000
Operating expenses
Selling expenses		450,000
Administrative expenses		570,000		1,020,000
Net income				$40,000

Additional information:

1.		Accounts receivable decreased $300,000 during the year.
2.		Prepaid expenses increased $170,000 during the year.
3.		Accounts payable to suppliers of merchandise decreased $300,000 during the year.
4.		Accrued expenses payable decreased $110,000 during the year.
5.		Administrative expenses include depreciation expense of $60,000.

Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2020, for Waterway Company, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

WATERWAY COMPANY Statement of Cash Flows (Partial) choose the accounting periodDecember 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020 December 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020
select an opening section nameCash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash
select an itemDecrease in Prepaid ExpensesIncrease in Accounts ReceivableDecrease in InventoryDecrease in Accrued Expenses PayableNet IncomeIncrease in Prepaid ExpensesIncrease in Accounts PayableDepreciation expenseDecrease in Accounts PayableDecrease in Accounts ReceivableIncrease in Accrued Expenses PayableIncrease in Inventory Net IncomeDepreciation expenseIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Accounts ReceivableDecrease in Accounts ReceivableIncrease in InventoryDecrease in InventoryIncrease in Prepaid ExpensesDecrease in Prepaid ExpensesDecrease in Accrued Expenses PayableIncrease in Accrued Expenses Payable		$enter a dollar amount
Adjustments to reconcile net income to
select a subsection nameCash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash
select an itemDecrease in InventoryDecrease in Accrued Expenses PayableIncrease in Accrued Expenses PayableDecrease in Accounts PayableDecrease in Accounts ReceivableIncrease in Accounts ReceivableNet IncomeIncrease in InventoryIncrease in Accounts PayableDepreciation expenseIncrease in Prepaid ExpensesDecrease in Prepaid Expenses Net IncomeDepreciation expenseIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Accounts ReceivableDecrease in Accounts ReceivableIncrease in InventoryDecrease in InventoryIncrease in Prepaid ExpensesDecrease in Prepaid ExpensesDecrease in Accrued Expenses PayableIncrease in Accrued Expenses Payable	$enter a dollar amount
select an itemDecrease in Accrued Expenses PayableDecrease in Accounts ReceivableNet IncomeIncrease in Accrued Expenses PayableDecrease in Prepaid ExpensesIncrease in Accounts PayableDecrease in InventoryDepreciation expenseIncrease in InventoryIncrease in Prepaid ExpensesIncrease in Accounts ReceivableDecrease in Accounts Payable Net IncomeDepreciation expenseIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Accounts ReceivableDecrease in Accounts ReceivableIncrease in InventoryDecrease in InventoryIncrease in Prepaid ExpensesDecrease in Prepaid ExpensesDecrease in Accrued Expenses PayableIncrease in Accrued Expenses Payable	enter a dollar amount
select an itemDecrease in Prepaid ExpensesDecrease in Accrued Expenses PayableIncrease in Prepaid ExpensesDepreciation expenseDecrease in InventoryIncrease in InventoryIncrease in Accounts PayableDecrease in Accounts ReceivableNet IncomeIncrease in Accounts ReceivableIncrease in Accrued Expenses PayableDecrease in Accounts Payable Net IncomeDepreciation expenseIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Accounts ReceivableDecrease in Accounts ReceivableIncrease in InventoryDecrease in InventoryIncrease in Prepaid ExpensesDecrease in Prepaid ExpensesDecrease in Accrued Expenses PayableIncrease in Accrued Expenses Payable	enter a dollar amount
select an itemDecrease in Accrued Expenses PayableDepreciation expenseDecrease in Accounts ReceivableDecrease in Prepaid ExpensesDecrease in Accounts PayableIncrease in Accrued Expenses PayableNet IncomeIncrease in Prepaid ExpensesIncrease in Accounts ReceivableIncrease in InventoryDecrease in InventoryIncrease in Accounts Payable Net IncomeDepreciation expenseIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Accounts ReceivableDecrease in Accounts ReceivableIncrease in InventoryDecrease in InventoryIncrease in Prepaid ExpensesDecrease in Prepaid ExpensesDecrease in Accrued Expenses PayableIncrease in Accrued Expenses Payable	enter a dollar amount
select an itemNet IncomeDecrease in Prepaid ExpensesDecrease in Accounts PayableIncrease in Accrued Expenses PayableIncrease in Accounts PayableDecrease in Accounts ReceivableDecrease in InventoryDepreciation expenseIncrease in InventoryDecrease in Accrued Expenses PayableIncrease in Accounts ReceivableIncrease in Prepaid Expenses Net IncomeDepreciation expenseIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Accounts ReceivableDecrease in Accounts ReceivableIncrease in InventoryDecrease in InventoryIncrease in Prepaid ExpensesDecrease in Prepaid ExpensesDecrease in Accrued Expenses PayableIncrease in Accrued Expenses Payable	enter a dollar amount
select an itemIncrease in InventoryDecrease in InventoryIncrease in Accounts PayableIncrease in Accounts ReceivableIncrease in Accrued Expenses PayableDepreciation expenseDecrease in Prepaid ExpensesDecrease in Accounts PayableIncrease in Prepaid ExpensesDecrease in Accounts ReceivableDecrease in Accrued Expenses PayableNet Income Net IncomeDepreciation expenseIncrease in Accounts PayableDecrease in Accounts PayableIncrease in Accounts ReceivableDecrease in Accounts ReceivableIncrease in InventoryDecrease in InventoryIncrease in Prepaid ExpensesDecrease in Prepaid ExpensesDecrease in Accrued Expenses PayableIncrease in Accrued Expenses Payable	enter a dollar amount
		enter a subtotal of the adjustments
select a closing section nameCash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash		$enter a total amount for the section

Answer 1

Cash flow from Operating activities	Amount(in $)
Net Income/(Loss)	40,000
Add:Depreciation expenses	60,000
Add:Decrease in Accounts Receivable	3,00,000
Less:Increase in Prepaid expenses	(1,70,000)
Less:Decrease in Accounts Payable	(3,00,000)
Less:Decrease in Accrued expenses Payable	(1,10,000)
Net Cash flow from Operating activities	(1,80,000)