1. During fiscal year 2018, Hoskins Corporation acquired new equipment for $1200 in cash. In addiiton, the company disposed of used equipment that had original cost of $1300 and accumulated depecreciation of $700, receiving $600 in cash from the buyer.2. During fiscal year 2018, Hoskins Corporation arranged short-term bank financing and borrowed $1500, using a portion of the cash to repay all of its outstanding long-term debt.3. During fiscal year 2018, Hoskins Corporation engaged in no transactions involving its common stock, though it did declare and pay in cash a common stock dividend of $250.Prepare a statement of cash flows (all three sections) for Hoskins Corporation’s fiscal year 2018, using the indirect method for the cash from operations section. **Income Statement for Fiscal Year 2018**- **Sales Revenues:** $6,500- **Cost of Goods Sold:** $3,400 **Gross Profit:** $3,100- **Selling, General and Administrative Expenses:** $1,450- **Depreciation Expense:** $350 **Operating Income:** $1,300- **Interest Expense:** $350 **Income Before Income Tax Expense:** $950- **Income Tax Expense:** $250 **Net Income:** $700**Explanation:**This income statement outlines the financial performance for the fiscal year 2018. It starts with sales revenues and deducts the cost of goods sold to calculate the gross profit. Further deductions include selling, general, administrative, and depreciation expenses to determine operating income. Interest expense is deducted to arrive at income before tax, and after subtracting income tax expense, the net income is calculated. **Balance Sheets****As of December 31, 2017, and December 31, 2018**---**Assets**- **December 31, 2017:** - Cash: $300 - Accounts receivable: $600 - Inventory: $400 - Prepaid expenses: $400 - **Current assets total**: $1,700 - Property, plant, and equipment at cost: $6,200 - Less accumulated depreciation: $(2,100) - Property, plant, and equipment, net: $4,100 - **Total assets**: $5,800- **December 31, 2018:** - Cash: $550 - Accounts receivable: $1,500 - Inventory: $500 - Prepaid expenses: $150 - **Current assets total**: $2,700 - Property, plant, and equipment at cost: $6,100 - Less accumulated depreciation: $(1,750) - Property, plant, and equipment, net: $4,350 - **Total assets**: $7,050---**Liabilities and Shareholders' Equity**- **December 31, 2017:** - Accounts payable: $400 - Income tax payable: $100 - Short-term debt: $1,200 - **Current liabilities total**: $1,800 - Long-term debt: $1,000 - **Total liabilities**: $2,800 - Contributed capital: $800 - Retained earnings: $2,200 - **Total shareholders' equity**: $3,000 - **Total liabilities and shareholders' equity**: $5,800- **December 31, 2018:** - Accounts payable: $800 - Income tax payable: $200 - Short-term debt: $2,700 - **Current liabilities total**: $3,600 - Long-term debt: N/A - **Total liabilities**: $3,600 - Contributed capital: $800 - Retained earnings: $2,650 - **Total shareholders' equity**: $3,450 - **Total liabilities and

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Answered: Balance Sheets December 31, 2017…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. During fiscal year 2018, Hoskins Corporation acquired new equipment for $1200 in cash. In addiiton, the company disposed of used equipment that had original cost of $1300 and accumulated depecreciation of $700, receiving $600 in cash from the buyer.

2. During fiscal year 2018, Hoskins Corporation arranged short-term bank financing and borrowed $1500, using a portion of the cash to repay all of its outstanding long-term debt.

3. During fiscal year 2018, Hoskins Corporation engaged in no transactions involving its common stock, though it did declare and pay in cash a common stock dividend of $250.

Prepare a statement of cash flows (all three sections) for Hoskins Corporation’s fiscal year 2018, using the indirect method for the cash from operations section.

**Income Statement for Fiscal Year 2018**

- **Sales Revenues:** $6,500
- **Cost of Goods Sold:** $3,400

**Gross Profit:** $3,100

- **Selling, General and Administrative Expenses:** $1,450
- **Depreciation Expense:** $350

**Operating Income:** $1,300

- **Interest Expense:** $350

**Income Before Income Tax Expense:** $950

- **Income Tax Expense:** $250

**Net Income:** $700

**Explanation:**

This income statement outlines the financial performance for the fiscal year 2018. It starts with sales revenues and deducts the cost of goods sold to calculate the gross profit. Further deductions include selling, general, administrative, and depreciation expenses to determine operating income. Interest expense is deducted to arrive at income before tax, and after subtracting income tax expense, the net income is calculated.

**Balance Sheets**

**As of December 31, 2017, and December 31, 2018**

---

**Assets**

- **December 31, 2017:**
- Cash: $300
- Accounts receivable: $600
- Inventory: $400
- Prepaid expenses: $400
- **Current assets total**: $1,700

- Property, plant, and equipment at cost: $6,200
- Less accumulated depreciation: $(2,100)
- Property, plant, and equipment, net: $4,100

- **Total assets**: $5,800

- **December 31, 2018:**
- Cash: $550
- Accounts receivable: $1,500
- Inventory: $500
- Prepaid expenses: $150
- **Current assets total**: $2,700

- Property, plant, and equipment at cost: $6,100
- Less accumulated depreciation: $(1,750)
- Property, plant, and equipment, net: $4,350

- **Total assets**: $7,050

---

**Liabilities and Shareholders' Equity**

- **December 31, 2017:**
- Accounts payable: $400
- Income tax payable: $100
- Short-term debt: $1,200
- **Current liabilities total**: $1,800

- Long-term debt: $1,000

- **Total liabilities**: $2,800

- Contributed capital: $800
- Retained earnings: $2,200
- **Total shareholders' equity**: $3,000

- **Total liabilities and shareholders' equity**: $5,800

- **December 31, 2018:**
- Accounts payable: $800
- Income tax payable: $200
- Short-term debt: $2,700
- **Current liabilities total**: $3,600

- Long-term debt: N/A

- **Total liabilities**: $3,600

- Contributed capital: $800
- Retained earnings: $2,650
- **Total shareholders' equity**: $3,450

- **Total liabilities and

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