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?

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2010 2009 Accounts receivable Inventory Office supplies Accounts payable Salaries and wages payable Interest payable Income taxes payable 4,000 32,000 7000 7,500 1,500 500 4,500 S 6,000 25,000 10,000 4,500 2,500 1.000 3,000