(Solution) - The following account balances for the noncash current assets and -(2025 Original AI-Free Solution)

Paper Details

The following account balances for the noncash current assets and current liabilities of Labrador Company are available:

In addition, the income statement for 2010 is as follows:
2010
Sales revenue ............... $100,000
Cost of goods sold ............. 75,000
Gross profit ............... $ 25,000
General and administrative expense ....... $ 8,000
Depreciation expense ........... 3,000
Total operating expenses ........... $ 11,000
Income before interest and taxes ........ $ 14,000
Interest expense ............. 3,000
Income before tax ............ $ 11,000
Income tax expense ............ 5,000
Net income ................ $ 6,000
Required
1. Prepare the Operating Activities section of the statement of cash flows using the direct method.
2. What does the use of the direct method reveal about a company that the indirect method doesnot?