The accounting records of Grand Pharmaceuticals, Inc., reveal the following:

Requirement

1. Prepare cash flows from operating activities using the direct method. Also evaluate Grand’s operating cash flow. Give the rationale for your evaluation.

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Net income... Payment of income tax.. Payment of salaries and wages.. $56,000 $33,000 . 13,000 Depreciation expense Collection of dividend 25,000 revenue ... Payment of interest... Decrease in current 11,000 liabilities . 13,000 17,000 . Cash sales.. Decrease in current assets 35,000 other than cash. Gain on sale of land 23,000 15,000 Payment of dividends . Acquisition of land with cash... 46,000 9,000 Collection of accounts Payment of accounts receivable.. payable 115,000 59,000