Portions of the financial statements for Hawkeye Company are provided below. Pre
ID: 2489570 • Letter: P
Question
Portions of the financial statements for Hawkeye Company are provided below.
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.)
Prepare the cash flows from operating activities section of the statement of cash flows for Hawkeye Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
Portions of the financial statements for Hawkeye Company are provided below.
HAWKEYE COMPANYIncome Statement
For the Year Ended December 31, 2013 Sales $ 960 Cost of goods sold (380 ) Gross margin 580 Salaries expense $ 238 Depreciation expense 196 Interest expense 46 Gain on sale of cash equivalents (4 ) (476 ) Income before taxes and extraordinary loss 104 Income tax expense (52 ) Income before extraordinary loss 52 Extraordinary loss (flood damage to inventory) 12 Less: Tax savings (6 ) (6 ) Net Income $ 46 HAWKEYE COMPANY
Selected Accounts from Comparative Balance Sheets
December 31, 2013 and 2012 Year 2013 2012 Change Cash $224 $206 $18 Accounts receivable 401 433 (32) Inventory 872 856 16 Accounts payable 216 246 (30) Salaries payable 186 200 (14) Interest payable 67 56 11 Income taxes payable 96 116 (20) 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.)
Direct Method Cash Flows from Operating Activities: $ Net cash flows from operating activities $ 2.Prepare the cash flows from operating activities section of the statement of cash flows for Hawkeye Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
Indirect Method Cash Flows from Operating Activities: Net income $ Adjustments for noncash effects: Changes in operating assets and liabilities: Net cash flows from operating activities $Explanation / Answer
Indirect Method $ Net Income 52 Add Expenses Not Requiring Cash: Depreciation 196 Gain on sale of cash equivalents 4 Other Other Adjustments: Add Reduction in Accounts Receivable 32 Subtract Decrease in Salary Payable -14 Add Increase in interesr payable 11 Subtract Decrease in Accounts Payable -30 Subtract Increase in Inventory -16 Income tax payable -20 Cash Flows from Operating Activities 215