Portions of the financial statements for Hawkeye Company are provided below. Pre
ID: 2489587 • 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.)
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 $Explanation / Answer
Cash flow statement -Direct Method $ Collections 992 Payments to Suppliers -426 Payments to Employees -14 552 Working Notes Collections Opeing A/R 433 Sales 960 Closing 401 Collections 992 Payments to Suppliers Opeing A/R 246 Purchases 396 Closing 216 Payments to Suppliers 426 Purchases Cost of goods sold 380 Less; Opening inventory 856 Add: clsoing 872 Purchases 396