Question

Portions of the financial statements for Hawkeye Company are provided below.    HAWKEYE COMPANY Income Statement...

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

HAWKEYE COMPANY
Income Statement
For the Year Ended December 31, 2021
($ in millions)
Sales $ 900
Cost of goods sold 350
Gross margin 550
Operating expenses:
Salaries $ 232
Depreciation 190
Loss on sale of land 12
Total operating expenses 434
Operating income 116
Other income (expense):
Gain on sale of cash equivalents 4
Interest expense (40)
Income before tax 80
Income tax expense 40
Net income $ 40

   

HAWKEYE COMPANY
Selected Accounts from Comparative Balance Sheets
December 31, 2021 and 2020
($ in millions)
Year
2021 2020 Change
Cash $ 212 $ 200 $ 12
Accounts receivable 395 421 (26)
Inventory 860 850 10
Accounts payable 210 234 (24)
Salaries payable 180 188 (8)
Interest payable 55 50 5
Income tax payable 90 104 (14)

Required:
2.
Prepare the cash flows from operating activities section of the statement of cash flows for Hawkeye Company using the indirect method. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)


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Answer #1

Answer-2)-

HAWKEYE COMPANY
STATEMENT OF CASH FLOWS PARTIAL (USING INDIRECT METHOD)
FOR THE YEAR ENDED DECEMBER 31,2021
Particulars Amount
$ in millions
Cash flow from operating activities
Net Income 40
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation expenses 190
Loss on sale of land 12
Gain on sale of cash equivalents -4
Change in operating assets & liabilities
Decrease in Accounts receivable 26
Increase in merchandise inventory -10
Decrease in accounts payable -24
Decrease in salaries payable -8
Decrease in income taxes payable -14
Increase in interest payable 5
Net cash flow from operating activities 213
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