Problem - Portions of the financial statements for Hawkeye Company are provided below.
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HAWKEYE COMPANY
Income Statement
For the Year Ended December 31, 2013
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Sales
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$820
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Cost of goods sold
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(310)
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Gross margin
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510
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Salaries expense
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$ 224
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Depreciation expense
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182
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Interest expense
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32
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Gain on sale of cash equivalents
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(4)
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(434)
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Income before taxes and extraordinary loss
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76
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Income tax expense
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(38)
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Income before extraordinary loss
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38
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Extraordinary loss (flood damage to inventory)
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12
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Less: Tax savings
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(6)
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(6)
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Net Income
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$32
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HAWKEYE COMPANY
Selected Accounts from Comparative Balance Sheets
December 31, 2013 and 2012
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Year
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2013
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2012
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Change
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Cash
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$248
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$218
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$30
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Accounts receivable
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387
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405
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(18)
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Inventory
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896
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868
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28
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Accounts payable
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228
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270
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(42)
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Salaries payable
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188
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204
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(16)
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Interest payable
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71
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58
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13
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Income taxes payable
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98
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120
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(22)
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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.)