Portions of the financial statements for Hawkeye Company are provided below.

HAWKEYE COMPANY

Income Statement

For the Year Ended December 31, 2013

Sales $ 850

Cost of goods sold (325 )

Gross margin 525

Salaries expense $ 227

Depreciation expense 185

Interest expense 35

Gain on sale of cash equivalents (4 ) (443 )

Income before taxes and extraordinary loss 82

Income tax expense (41 )

Income before extraordinary loss 41

Extraordinary loss (flood damage to inventory) 12

Less: Tax savings (6 ) (6 )

Net Income $ 35

HAWKEYE COMPANY

Selected Accounts from Comparative Balance Sheets

2013 and 2012

Year

2013 2012 Change

Cash $242 $215 $27

Accounts receivable 390 411 (21)

Inventory 890 865 25

Accounts payable 225 264 (39)

Salaries payable 185 198 (13)

Interest payable 65 55 10

Income taxes payable 95 114 (19)

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

1. DIRECT METHOD

Cash Flows from Operating Activities:

Cash received from customers $ ______________

Gain on sale of cash equivalents $