Portions of the financial statements for Hawkeye Company are provided below.
HAWKEYE COMPANY
Income Statement
For the Year Ended December 31, 2013
$ Sales
Cost of
goods sold 820
(310) Gross
margin
Salaries
expense
Depreciati
on expense
Interest
expense
Gain on
sale of cash
equivalents 510
$ 224
182
32
(4) (434) Income
before taxes
and
extraordinar
y loss
Income
tax expense
Income
before
extraordinar
y loss
Extraordi
nary loss
(flood
damage to
inventory)
Less: Tax
savings 76 (38) 38 12 (6) (6) Net
Income $ 32 HAWKEYE COMPANY
Selected Accounts from Comparative Balance Sheets
December 31, 2013 and 2012
Year
2013 2012 Change Cash
Accounts receivable
Inventory
Accounts payable
Salaries payable
Interest payable
Income taxes payable $248
387
896
228
188
71
98 $218
405
868
270
204
58
120 $30
(18)
28
(42)
(16)
13
(22) Required:
1. Prepare the cash flows from operating activities section of the statement of cash flows for Hawkeye Company
using the direct method. (Amounts to be deducted should be indicated with a minus sign.)
Direct Method
Cash Flows from Operating Activities:
$
Cash received from customers
2 Cash paid to suppliers
2 Cash paid to employees
2 Cash paid for interest
2 Cash paid for income taxes
2 (Click to select)
2 Net cash flows from operating activities $ 2. Prepare the cash flows from operating activities section of the statement of cash flows for Hawkeye Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
Indirect Method
Cash Flows from Operating Activities:
$ Net income
Adjustments for noncash effects: Depreciation expense
2 Extraordinary gain
2 Changes in operating assets and liabilities: Decrease in accounts receivable
2 Increase in inventory
2 Decrease in accounts payable
2 Decrease in salaries payable
2 Increase in interest payable
2 Decrease in income taxes payable
2 Net cash flows from operating activities $

Required:

1.

Prepare the cash flows from operating activities section of the statement of cash flows for Hawkeye Company using the direct method.(Amounts to be deducted should be indicated with a minus sign.)

2.

Prepare the cash flows from operating activities section of the statement of cash flows for Hawkeye Company using the indirect method.(Amounts to be deducted should be indicated with a minus sign.)