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

Cash flow Statement: It is prepared by the companies. It is a tool in the hands of users of financial statements to know about the sources and uses of cash of a company over a period of time from different activities. It is especially useful for short term analysis of cash position and planning.HOSKINS CORPORATION STATEMENT OF CASH FLOWS FOR YEAR ENDED DECEMBER 2018 Particular Working notes Amount ($) Cash flow from operating activity Net Income 700 Add: Depreciation 1 350 Less: Increase in account receivable 2 (900) Less: Increase in inventory 3 (100) Add: Decrease in prepaid expenses 4 250 Add: Increase in account payable 5 400 Less: Income tax payable 6 (100) Cash flow from operating activity (a) 600 Cash flow from Investing activity Payment for new equipment (1,200) Proceeds from disposal of equipment 600 Cash flow from Investing activity (b) (600) Cash flow from Financing activity Long term debt repayment (1,000) Increase in short term debt 1,500 Dividend paid (250) Cash flow from Financing activity (c) 250 Net Increase in cash & cash equivalent (a+b+c) 250 Cash & cash equivalent in the beginning 300 Cash & cash equivalent at the end 5501) Depreciation of $350 adds back in operating cash flow because it is the non-cash expense. 2) Account receivable increased by $900, so subtracted from operating cash flow. 3) Inventory increased by $100 so that subtracted. 4) Prepaid expenses have been decreased by $250, so added to operating cash flow. 5) Account payable has been increased by $400, so added to operating cash flow. 6) Income tax payable has been decreased by $100 so subtracted from operating cash flow.