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 Accounts Payable Balance Sheet at December 31 Cash Accounts Receivable Equipment Accumulated Depreciation-Equipment Total Assets Salaries and Wages Payable $ 6,300 900 5,500 (1,500) $ 4,000 1,750 5,000 (1,250) $11,200 $ 9,500 $ 500 $ 1,000 500 750 Note Payable (long-term) 1,700 500 Common Stock 5,000 5,000 Retained Earnings 3,500 2,250 Total Liabilities and Stockholders' Equity $11,200 $ 9,500 Income Statement Service Revenue $37,500 Salaries and Wages Expense Depreciation Expense Loss on Disposal of Equipment Income Tax Expense Net Income 35,000 500 550 200 $ 1,250 Additional Data: a. Bought new equipment for $1,800 cash and sold existing equipment for $500 cash. The equipment that was sold had cost $1,300 and had Accumulated Depreciation of $250 at the time of sale. b. Borrowed $1,200 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 with a minus sign.) 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: Cash Flows from Investing Activities: Cash Flows from Financing Activities: $ 1,250 1,250 0 0 0