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HAWK Inc.s comparative balance sheets for December 31, 2021 and 2020, and its income statement for the year ended December 31, 2021 are as follows:
| HAWK Ltd. |
| Statement of Financial Position |
| As at December 31 |
| | | |
| | 2021 | 2020 |
| Current assets | | |
| Cash | $62,000 | $40,000 |
| Accounts receivable | 167,000 | 141,000 |
| Merchandise inventory | 156,000 | 178,000 |
| Prepaid expenses | 19,000 | 16,000 |
| | 404,000 | 375,000 |
| | | |
| Long-term investments | 360,000 | 220,000 |
| Equipment | 1,240,000 | 1,150,000 |
| Accumulated depreciation | (780,000) | (740,000) |
| | 460,000 | 410,000 |
| | $1,224,000 | $1,005,000 |
| | | |
| Current liabilities | | |
| Accounts payable | $173,000 | $120,000 |
| Dividends payable | 30,000 | 35,000 |
| Income taxes payable | 24,000 | 20,000 |
| | 227,000 | 175,000 |
| | | |
| Bonds payable | 578,000 | 500,000 |
| | | |
| Shareholders' Equity | | |
| Common shares | 240,000 | 200,000 |
| Retained earnings | 179,000 | 130,000 |
| | | |
| | 419,000 | 330,000 |
| | $1,224,000 | $1,005,000 |
Additional information for 2021:
1. Investments were purchased during the year for cash (no investments were sold during the year).
2. HAWK sold equipment that had originally cost $50,000 (and that had a net book value of $35,000) during 2021 resulting in a gain on sale of $10,000.
3. There were no common shares or bonds repurchased or retired in 2013.
REQUIRED
Prepare in good form the Cash Flow from Operations section of the Statement of Cash Flow, using the indirect method.
HAWK Ltd. Statement of Income For the Year Ended December 31, 2013
Answer & Explanation
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