Portions of the financial statements for Hawkeye Compay are provided below: Hawk
ID: 2447128 • Letter: P
Question
Portions of the financial statements for Hawkeye Compay are provided below:
Hawkeye Company
Income Statement
For the year ended Dec 31, 2013
($ in 000s)
Sales
$ 900
Cost of Good Sold
(350)
Gross Margin
550
Salaries Expense
$232
Depreciation expense
190
Interest Expense
40
Gain on sale of cash equivalents
(4)
(458)
Income before taxes and extraordinary loss
92
Income tax expense
(46)
Income before extraordinary loss
46
Extraordinary loss (flood damage to inventory)
12
Less: Tax savings
(6)
(6)
Net Income
40
Hawkeye Company
Selected Accounts from Comparative Balance Sheets
Dec 31, 2013 and 2012
($ in 000s)
2013
2012
Change
Cash
212
200
12
Accounts Receivable
395
421
(26)
Inventory
860
850
10
Accounts Payable
210
234
(24)
Salaries payable
180
188
(8)
Deferred income tax liability
55
50
5
Bond Discount
90
104
(14)
Required:
1. Prepare the cash flows from operating activities section of the statement of cash flows 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.
Sales
$ 900
Cost of Good Sold
(350)
Gross Margin
550
Salaries Expense
$232
Depreciation expense
190
Interest Expense
40
Gain on sale of cash equivalents
(4)
(458)
Income before taxes and extraordinary loss
92
Income tax expense
(46)
Income before extraordinary loss
46
Extraordinary loss (flood damage to inventory)
12
Less: Tax savings
(6)
(6)
Net Income
40
Explanation / Answer
ANSWER:
88.34 ± 61.0966 = +27.2434 – +149.4366. Since the range does not include 0, there appears to be a significant difference between the means of the two groups. In this case, it appears as though the Q-Mart charge card holders spend more money than those who use other types of charge cards.