Operating Activities Section-Direct Method The following account balances for the noncash current assets and current liabilities of Labrador Company are available: December 31 2017 2016 4,000 6,000 Accounts receivable Inventory Office supplies Accounts payable Salaries and wages payable Interest payable Income taxes payable In addition, the income statement for 2017 is as follows: 32,000 25,000 7,000 10,000 7,500 4,500 1,500 2,500 500 1,000 4,500 3,000 In addition, the income statement for 2017 is as follows 2017 Sales revenue $100,000 75,000 25,000 General and administrative expense $8,000 3,000 $11,000 Income before interest and taxes $ 14,000 3,000 11,000 5,000 6,000 Cost of goods sold Gross profit Depreciation expense Total operating expenses Interest expense Income before tax Income tax expense Net income Required: Required: 1. Prepare the Operating Activities section of the statement of cash flows using the direct method. Use the minus sign to indicate cash payments, cash outflows, or decreases in cash. Labrador Company Partial Statement of Cash Flows For the Year Ended December 31, 2017 Cash Flows from Operating Activities Cash collected from customers. Cash payments for: 102,000 Inventory Cost of goods sold x Accounts payable x Total cash payments 2. All of the following reveal what the use of the direct method does which the indirect method does not do EXCEPT for: a. The direct method shows the users the specific amounts collected and paid for operating purposes b. The indirect method just simply reconciles net income of the period to the cash flow from operations without having to detall the cash actually recelved and the cash paid. c. The use of the direct method shows collections from customers and amounts paid for operating purposes d. The use of the direct method will give a higher net cash flow from operating activities as compared to the indirect method. a x