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

In addition, the income statement for 2014 is as follows:
                                                                                                 2014
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 does not?

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December 31 2014 2013 $ 4,000 $ 6,000 Accounts receivable Inventory Office supplies Accounts payable Salaries and wages payable Interest payable Income taxes payable 32,000 25,000 7,000 10,000 7,500 4,500 1,500 2,500 500 1,000 3,000 4,500