Heads Up Company was started several years ago by two hockey instructors. The company's comparative balance sheets and income statement are provided below, along with additional information. Cash Balance Sheet at December 31 Accounts Receivable Equipment Less: Accumulated Depreciation Current Year Prior Year $ 7,790 $ 5,750 1,395 7,495 (2,140) Accounts Payable Wages Payable Long-Term Bank Loan Payable Contributed Capital Retained Earnings Income Statement (current year) Lessons Revenue Wages Expense Depreciation Expense Income Tax Expense Net Income Additional notes: 2,160 6,800 (1,700) $ 14,540 $ 13,010 $ 950 $ 1,520 95 770 3,090 1,270 5,000 5,000 5,405 4,450 $ 14,540 $ 13,010 $ 44,400 41,900 440 1,105 $ 955 a. Bought new hockey equipment for cash, $695. b. Borrowed $1,820 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. 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 by a minus sign.) HEADS UP COMPANY Statement of Cash Flows For the Year Ended December 31 Cash flows from operating activities: Net income $ 955 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense $ 440 Decrease in accounts receivable 765 Decrease in accounts payable Decrease in wages payable (570) (675) Cash flows from investing activities: 915 0 Cash flows from financing activities: Net increase in cash during the year Cash balance, January 1 Cash balance, December 31 0 0 References Worksheet Learning Objective: 12-02 Report cash flows from operating activities using the indirect method. Learning Objective: 12-03 Report cash flows from investing activities. Learning Objective: 12-04 Report cash flows from financing activities. Learning Objective: 12-05 Interpret cash flows from operating, investing, and financing activities