Current Year Previous Year Common Stock Balance Sheet at December 31 Cash Accounts Receivable Equipment Accumulated Depreciation-Equipment Total Assets Accounts Payable Salaries and Wages Payable Notes Payable (long-term) Retained Earnings $ 10,700 1,200 $ 5,500 2,500 13,200 (1,900) $ 23,200 $ 500 600 2,000 12,000 (1,500) $ 18,500 $ 1,000 1,000 1,000 12,000 12,000 8,100 3,500 Total Liabilities and Stockholders' Equity $ 23,200 $ 18,500 Income Statement Service Revenue $ 69,000 63,000 Salaries and Wages Expense Depreciation Expense Income Tax Expense Net Income 400 1,000 $ 4,600 Additional Data: a. Bought new golf clubs using cash, $1,200. b. Borrowed $1,000 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 Income Tax Expense was fully paid in cash. Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the direct method. TIP: Remember to exclude depreciation expense when converting to the cash basis. (Amounts to be deducted should be indicated with a minus sign.) SOFT TOUCH COMPANY Statement of Cash Flows For the Year Ended December 31 < Prev 5 of 6 Score answer >