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

Requirement
Prepare cash flows from operating activities using the direct method. Also evaluate Pelham's operating cash flow. Give the reason for your evaluation.

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Payment of salaries $20,000 $36,000 Payment of income tax..n8,000 Net inco and wages. Depreciation expense Decrease in current 26,000 Collection of dividend 9,000 20,000 45,000 6,000 reveniC iabilities 11,000 Payment of interest.... Decrease in current assets Cash sales other than cash 21,000 Gain on sale of land Payment of dividends. Collection of accounts Payment of accounts receivable. 90,000 payable 54,000