FutureTech Enterprises recorded the following cash transactions during the year ending December 31, 20X1:

• Collected $350,000 from customers on January 1.
• Paid $180,000 to suppliers for inventory purchases on March 31.
• Paid $70,000 for operating expenses on June 30.
• Received $90,000 in cash dividends from investments on September 30.
• Paid $40,000 in income taxes on December 31.

Required:

• Prepare the cash flow statement for the year ending December 31, 20X1, using the direct method.
• Calculate the net cash provided by operating activities.
• Discuss the impact of the cash flow from operating activities on the company’s liquidity.
• Explain how the direct method differs from the indirect method in preparing the cash flow statement.