Portions of the financial statements for Hawkeye Company are provided below. HAWKEYE COMPANY Income Statement For the Year Ended December 31, 2013
| Portions of the financial statements for Hawkeye Company are provided below. |
|
HAWKEYE COMPANY Income Statement For the Year Ended December 31, 2013 | |||||
| Sales | $ | 820 | |||
| Cost of goods sold | (310 | ) | |||
| Gross margin | 510 | ||||
| Salaries expense | $ 224 | ||||
| Depreciation expense | 182 | ||||
| Interest expense | 32 | ||||
| Gain on sale of cash equivalents | (4 | ) | (434 | ) | |
| Income before taxes and extraordinary loss | 76 | ||||
| Income tax expense | (38 | ) | |||
| Income before extraordinary loss | 38 | ||||
| Extraordinary loss (flood damage to inventory) | 12 | ||||
| Less: Tax savings | (6 | ) | (6 | ) | |
| Net Income | $ | 32 | |||
|
HAWKEYE COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2013 and 2012 | ||||
| Year | ||||
| 2013 | 2012 | Change | ||
| Cash | $248 | $218 | $30 | |
| Accounts receivable | 387 | 405 | (18) | |
| Inventory | 896 | 868 | 28 | |
| Accounts payable | 228 | 270 | (42) | |
| Salaries payable | 188 | 204 | (16) | |
| Interest payable | 71 | 58 | 13 | |
| Income taxes payable | 98 | 120 | (22) | |
| 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: | |
| (Click to select) Gain on sale of cash equivalents Cash paid for interest Cash paid to suppliers Cash paid to employees Interest expense Cost of goods sold Cash received from customers Cash paid for income taxes | $ |
| (Click to select) Cost of goods sold Interest expense Cash paid to employees Cash received from customers Cash paid to suppliers Cash paid for income taxes Gain on sale of cash equivalents Cash paid for interest | |
| (Click to select) Cash paid to suppliers Cash paid for interest Gain on sale of cash equivalents Cost of goods sold Cash paid for income taxes Cash received from customers Cash paid to employees Interest expense | |
| (Click to select) Cash received from customers Cash paid to employees Cost of goods sold Gain on sale of cash equivalents Interest expense Cash paid for interest Cash paid for income taxes Cash paid to suppliers | |
| (Click to select) Interest expense Cost of goods sold Gain on sale of cash equivalents Cash paid to employees Cash received from customers Cash paid for interest Cash paid for income taxes Cash paid to suppliers | |
| (Click to select) Interest expense Gain on sale of cash equivalents Cash received from customers Cost of goods sold Cash paid for interest Cash paid for income taxes Cash paid to suppliers Cash paid to employees | |
| 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: | |
| (Click to select) Salaries expense Sales Depreciation expense Extraordinary loss Interest expense Extraordinary gain Cost of goods sold Bad debt expense | |
| (Click to select) Extraordinary gain Depreciation expense Sales Extraordinary loss Salaries expense Cost of goods sold Interest expense Bad debt expense | |
| Changes in operating assets and liabilities: | |
| (Click to select) Increase in inventory Decrease in accounts payable Decrease in salaries payable Increase in interest payable Decrease in income taxes payable Decrease in accounts receivable | |
| (Click to select) Decrease in income taxes payable Increase in interest payable Decrease in accounts payable Increase in inventory Decrease in accounts receivable Decrease in salaries payable | |
| (Click to select) Increase in accounts payable Decrease in income taxes payable Decrease in inventory Decrease in accounts payable Decrease in salaries payable Increase in interest payable | |
| (Click to select) Decrease in inventory Decrease in income taxes payable Increase in accounts payable Decrease in accounts payable Decrease in salaries payable Increase in interest payable | |
| (Click to select) Decrease in inventory Decrease in salaries payable Increase in interest payable Increase in accounts payable Decrease in accounts payable Decrease in income taxes payable | |
| (Click to select) Decrease in income taxes payable Increase in interest payable Decrease in accounts payable Decrease in salaries payable Increase in accounts payable Decrease in inventory | |
| Net cash flows from operating activities | $ |
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