Question

ДА F G H I J N O P Q R K L M For the Year of 2016 December 31, 2016 and 2015 Notes: 2016 2015 Change 7 $ 0 1 Assets Current Assets: Cash Marketable Securities Accounts Receivable Inventory Total Current Assets 40,000 50,000 95,000 25,000 210,000 30,000 50,000 100,000 20,000 200,000 $ $ (5,000) 5,000 Cash Flow Provided by Operating Activities: Net Income Adjustments to Reconcile Net Income to Net Cash Flow Provided by Operating Activities: Depreciation Expense Gain on sale of investments Change in Accts Receivables Bal. Change in Inventory Bal. Change in Accts Payable Bal. Net Cash Flows from Operating Activities 2 3 60,000 100,000 5 6 7 8 Investments Property and Equipment Land Building Equipment Accumulated Depreciation Net Property and Equipment Total Assets 9 500,000 6,000,000 1,100,000 (2,000,000) 5,600,000 5,870,000 500,000 5,000,000 1,000,000 (1,600,000) 4,900,000 5,200,000 Cash Flow Provided by Investing Activities: Proceeds from sale of investment Purchase of building Purchase of equipment Net Cash Flows from Investing Activities -1 $ $ -4 $ $ 10,000 Liabilities and Owners Equity Current Liabilities Accounts Payable Dividends Payable Current Portion of LT Debt Total Current Liabilities 70,000 50,000 130,000 250,000 60,000 30,000 100,000 190,000 Cash Flow Provided by Financing Activities: Payment of long-term debt Borrowing - long-term debt Payment of dividends Net Cash Flows from Financing Activities -1 Increase in Cash Cash at the beginning of 2016 Cash at the end of 2016 2 Long-Term Debt Capital Stock Retained Earnings Total Liabilities and Owner Equity 4,370,000 700,000 550,000 5,870,000 4,000,000 700,000 310,000 5,200,000 3 $ $ Supplementary Disclosure of Cash Flow Information: Cash paid during the year for:

You have been recently assigned as the new owner representative and asset manager at Capital Hotel Investments, Inc and will oversee 12 hotel properties including the Hilton Garden Inn of Tysons, VA.

Following a poor operational 2016 at the Hilton hotel at Tysons, Capital Hotel Investments’ CFO asked you to work with the Hilton’s property management to identify why the hotel’s cash position remains the same despite the realizing $300,000 gain on investments in 2016.  

The property director of finance as informed you of the following;

1. Dividends declared during 2016 were $50,000
2. Other than a new building and new equipment, there were no other new investments purchased during 2016.
3. The current portion of the long term debt at the end of 2016 was reclassified from non- current during 2016.
4. No equipment or buildings were sold during 2016.
5. Long term debt was borrowed to partially finance the building purchase.

The condensed balance sheets and income statements for the Hilton Garden Inn are attached. You are required to prepare a Statement of Cash Flow for 2016.

Answer 1

Cash Flow Statement
Indirect Method
Cash flow from Operating Activities
Net Income		$     2,90,000.00
Adjustments
Depreciation	$   4,00,000.00
Gain on sale of Investments	$ -3,00,000.00
Decrease in Accounts Receivable	$       -5,000.00
Increase in inventories	$         5,000.00
Increase in Accounts payable	$      10,000.00
Total Adjustments		$     1,10,000.00
Cash from operating activities			$ 4,00,000.00
Cash flow from Investing Activities
Sale of investments		$     3,40,000.00
Purchase of Building		$ -10,00,000.00
Purchase of Equipment		$   -1,00,000.00
Cash used in investing activities			$ -7,60,000.00
Cash flow from Financing Activities
Payment of Long term debt		$   -1,00,000.00
Borrowing Long term debt		$     5,00,000.00
Dividend Paid		$      -30,000.00
Cash from financing activities			$ 3,70,000.00
Net Increase in cash			$      10,000.00
Opening Balance of Cash			$      30,000.00
Closing Balance of Cash			$      40,000.00
Cash paid for income taxes		$     1,10,000.00