Avatar Company Uses the Direct Method to Prepare Its Statement

Avatar Company uses the direct method to prepare its statement of cash flows. Refer to the following financial statement information for the year ending December 31, 2015:

$\begin{array}{c} \text {Avatar Company }\\ \text {Income Statement }\\ \text {Year Ended December 31, 2015}\\\begin{array}{lll} \text {Sales Revenue}\\ \text {Interest Revenue}\\ \text {Gain on Sale of Plant Assets}\\ \text {Total Revenues and Gains}\\ \text {Cost of Goods Sold}\\ \text {Salaries and Wages Expense}\\ \text {Depreciation Expense-Plant Assets}\\ \text {Other Operating Expense}\\ \text {Interest Expense}\\ \text {Income Tax Expense}\\ \text {Total expenses}\\ \text {Net Income}\end{array}\begin{array}{r}\$ 291,300 \\1,000 \\\underline{6,000} \\\$ 298,300 \\145,000 \\49,000 \\16,000 \\25,000 \\3,500 \\\underline{7,800} \\ \underline{246,300} \\\underline{\$ 52,000} \\\end{array}\end{array}$

$\begin{array}{c} \text {Avatar Company}\\ \text {Statement of Retained Earnings}\\ \text {Year Ended December 31, 2015}\\\begin{array}{lll} \text {Retained Earnings, January 1, 2014}\\ \text {Add: Net income}\\ \text {Less: Dividends}\\ \text {Retained Earnings, December 31, 2014} \end{array}\begin{array}{r}\$ 78,000 \\52,000 \\\underline{15,000} \\\underline{\underline{\$ 115,000}} \\ \end{array}\end{array}$

Prepare the operating activities section of the statement of cash flows, using the direct method.