CP12-7 (Supplement 12A) Preparing and Interpreting a Statement of Cash Flow (Indirect Method) [LO 12-S1 Soft Touch Company was started several years ago by two golf instructors. The company's comparat statement are presented below, along with additional Information. Current Year Previous Yei Balance Sheet at December 31 Cash Accounts Receivable Equipment Accumulated Depreciation-Equipment $13,748 2,400 12,100 $ 8,250 3,680 11,80 (2,600) $28,258 $ 2,1e0 1,550 1,800 11,ee0 (3,070) Total Assets Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings $25,170 $ 1,100 1,040 3,100 11,000 Total Liabilities and Stockholders' Equity$25,170 $20,250 Income Statement Service Revenue Salaries and Wages Expense Depreciation Expense Loss on Disposal of Equipment Income Tax Expense Net Income $75,400 68,500 980 490 1.100 s 4,330 Prev7 of 8 to search $75,488 Loss on Disposal of Equipment 1,100 $4,330 Additlonal Data: a Bought new goif clubs for $3100 cash and sold exsing clubs for $1000 cash The clubs thet were sold hed cost $2000 and had Accumulated Deprectation of $510 at the time of sale. b Borrowed $2,100 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 liablity accounts relating to income tax, assume that Income Tax Expense was fully paid in cash Required: 1. Prepare the statement of cash flows for the year ended December 31 using the indirect method. (Amounts to be deducted should be Indicated with a minus sign.) For the Year Ended December 31 S76.800 Adjustments to Reconcile Net income to Net Cash Provided search For the Year Ended December 31 Cash Flows from Operating Activities Net Income Adjustments to Reconcile Net Income to Net Cash Provided S 76,800 by Operating Activities: Depreciation Expense Decrease in Accounts Receivable Decrease in Accounts Payable Decrease in Salaries and Wages Payable Loss on Disposal of Equipment 76.600 Cash Flows from Investing Activities: Cash Payments to Purchase Equipment Cash Proceeds from Disposal of Equipment 0 Cash Flows from Financing Activities Cash Payments to Purchase Equipment 0 Cash Balance. January 1