Question

Please answer 25-28

25) Hawk Co. provided the following information on selected transactions during 2021:

Purchase of land by issuing bonds $1,300,000

Proceeds from issuing bonds 2,500,000

Purchases of inventory 3,800,000

Dividends paid to common stockholders 340,000

Proceeds from issuing preferred stock 1,600,000

Proceeds from sale of land 200,000

The net cash provided (used) by financing activities during 2021 is ________

26) Deferred tax assets affect both the income statement and the balance sheet. (answer True or False)

27) Interest from tax exempt municipal bonds is an example of a temporary difference which will result in a deferred tax liability. (answer True or False)

28) Warranty expense accrued on the income statement but not yet deducted on the tax report is an example of a temporary difference which will give rise to a deferred tax asset. (answer True or False)

Answer 1

25) The net cash flow provided by financing activities during 2021 is:
Proceeds from issuing Bonds		2500000
Proceeds from issuing preferred stocks	1600000
Dividend paid to common stock holders	-340000
Net Cash flow from financing activities	3760000
26) False
Deferred tax asset only affects Balance sheet and not Income Statement
27) False
As the differnce in Taxable income and Book profit is permanent difference and there will
not be any reversal in the future.
28) True
As Warranty expenses are deductibel for purpose on payment basis and not on accrual basis
there is temporary difference.