Question 5:

Preparing a Statement of Cash Flows (Indirect Method)

The following financial statements were issued by Hoskins Corporation for the fiscal year ended December 31, 2016. All amounts are in millions of U.S. dollars.

Balance Sheets
		December 31, 2015	December 31, 2016
	Assets
	Cash	$900	$1,650
	Accounts Receivable	1,800	4,500
	Inventory	1,200	1,500
	Prepaid Expenses	1,200	450
	Current Assets	5,100	8,100
	Property, Plant and Equipment at Cost	18,600	18,300
	Less Accumulated Depreciation	(6,300)	(5,250)
	Property, Plant and Equipment, Net	12,300	13,050
	Total Assets	$17,400	$21,150
	Liabilities and Shareholders Equity
	Accounts Payable	$1,200	$2,400
	Income Tax Payable	600	300
	Short-Term Debt	3,600	8,100
	Current Liabilities	5,400	10,800
	Long-Term Debt	3,000	0
	Total Liabilities	8,400	10,800
	Contributed Capital	2,400	2,400
	Retained Earnings	6,600	7,950
	Total Shareholders Equity	9,000	10,350
	Total Liabilities and Shareholders Equity	$17,400	$21,150

Income Statement
			Fiscal year 2016
	Sales Revenues		$19,500
	Cost of Goods Sold		10,200
	Gross Profit		9,300
	Selling, General and Administrative Expenses		4,350
	Depreciation Expense		1,050
	Operating Income		3,900
	Interest Expense		1,050
	Income Before Income Tax Expense		2,850
	Income Tax Expense		750
	Net Income		$2,100

Additional information: 1. During fiscal year 2016, Hoskins Corporation acquired new equipment for $3,600 in cash. In addition, the company disposed of used equipment that had original cost of $3,900 and accumulated depreciation of $2,100, receiving $1,800 in cash from the buyer. 2. During fiscal year 2016, Hoskins Corporation arranged short-term bank financing and borrowed $4,500, using a portion of the cash to repay all of its outstanding long-term debt. 3. During fiscal year 2016, Hoskins Corporation engaged in no transactions involving its common stock, though it did declare and pay in cash a common stock dividend of $750.

Prepare a statement of cash flows (all three sections) for Hoskins Corporations fiscal year 2016, using the indirect method for the cash from operations section.

Note: Use a negative sign with your answer to indicate a reduction in cash/cash outflow.

Please answer in same format as given photo

2,100 HOSKINS CORPORATION STATEMENT OF CASH FLOWS FOR YEAR ENDED DECEMBER 31, 2016 Cash flows from Operations: Net income $ Adjustments: Depreciation Change in accounts receivable Change in inventory Change in prepaid expenses Change in accounts payable 12 1,050 0 0 0 0 0 1,800 Cash Flows from Operating Activities $ Cash Flows from Investing: 0 1,800 Proceeds from disposal of equipment Cash Flows from Investing Activities Cash Flows from Financing (1.800) 0 0 0 750 Increase in short-term debt Decrease in long-term debt Cash Flows from Financing Activities Net change in cash Beginning cash balance Ending cash balance 750 900 $ 1,650