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

December 31

                                                                2012                         2011

Accounts receivable...........................$ 4,000..................$ 6,000

Inventory.........................................32,000..................25,000

Office supplies....................................7,000..................10,000

Accounts payable.................................7,500....................4,500

Salaries and wages payable......................1,500...................2,500

Interest payable......................................500...................1,000

Income taxes payable.............................4,500...................3,000

In addition, the income statement for 2012 is as follows:

                                                                2012

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?