Operating activities—direct method (Learning Objective 4) 10–15 min.

The accounting records of The Picket Fence, Inc., reveal:

$ 41,000 20,000 6,000 36,000 133,000 Net Income ............................

Payment of income tax ..........

Collection of dividend revenue ...............

Payment to suppliers .............

Collections from customers ...

$30,000 10,000 22,000 6,000 Payment of salaries and wages ..............

Depreciation Expense...............

Payment of interest..................

Payment of dividends.............................

Requirements 1. Compute cash flows from operating activities by the direct method.

2. Evaluate the operating cash flow of The Picket Fence, Inc. Give the reason for your evaluation.

AppendixLO1