5 Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) 4 points HEADS UP COMPANY Statement of Cash Flows For the Year Ended December 31 Cash Flows from Operating Activities: Net Income Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: $ 1,120 Cash Balance, December 31 1,120 Cash Balance, January 1 Cash Payments to Purchase Equipment Cash Proceeds from Bank Loan 0 Cash Flows from Financing Activities: 0 $ 0 PA12-4 Preparing and Interpreting a Statement of Cash Flows (Indirect Method) [LO 12-2, LO 12-3, LO 12- 4, LO 12-5) Heads Up Company was started several years ago by two hockey instructors. The company's comparative balance sheets and income statement follow, along with additional information. Current Year Previous Year Balance Sheet at December 31 Cash $ 6,060 830 4,730 (1,360) $10,260 $ 770 570 1,600 4,300 Accounts Receivable Equipment Accumulated Depreciation-Equipment Total Assets Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings Total Liabilities and Stockholders' Equity Income Statement Service Revenue Salaries and Wages Expense Depreciation Expense Income Tax Expense Net Income $ 3,920 1,610 4,300 (1,180 $ 8,650 $ 1,200 750 500 4,300 1,900 $ 8,650 3,020 $10,260 $40,900 38,400 180 1,200 $ 1,120 Additional Data: a. Bought new hockey equipment for cash, $430. b. Borrowed $1,100 cash from the bank during the year. c. Accounts Payable includes only purchases of services made on credit for operating purposes. Because there are no liability accounts relating to income tax, assume that this expense was fully paid in cash