Operating activities—direct method (Learning Objective 4) 10–15 min.

The accounting records of Caspian, Inc., reveal the following:

$ 36,000 9,000 8,000 41,000 90,000 Net Income ............................

Payment of income tax ..........

Collection of dividend revenue ...............

Payment to suppliers .............

Collections from customers ...

$46,000 12,000 15,000 5,000 Payment of salaries and wages ..............

Depreciation Expense...............

Payment of interest..................

Payment of dividends.............................

Requirements 1. Compute cash flows from operating activities by the direct method.

2. Evaluate the operating cash flow of Caspian, Inc. Give the reason for your evaluation.

AppendixLO1