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

HAWKEYE COMPANY

Income Statement

For the Year Ended December 31, 2018Sales$980Cost of goods sold390Gross margin590Operating expenses:Salaries$240Depreciation198Loss on sale of land14Total operating expenses452Operating income138Other income (expense):Gain on sale of cash equivalents4Interest expense(48)Income before tax94Income tax expense47Net income$47

HAWKEYE COMPANY

Selected Accounts from Comparative Balance Sheets

December 31, 2018 and 2017Year20182017ChangeCash$228$208$20Accounts receivable403437(34)Inventory87685818Accounts payable218250(32)Salaries payable188204(16)Interest payable715813Income taxes payable98120(22)

Required:

1.Prepare the cash flows from operating activities section of the statement of cash flows for Hawkeye Company using the direct method.

2.Prepare the cash flows from operating activities section of the statement of cash flows for Hawkeye Company using the indirect method.