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 $ 3,680 1,590 4,200 (1,170) $ 8,300 Balance Sheet at December 31 Cash Accounts Receivable Equipment Accumulated Depreciation-Equipment Total Assets Accounts Payable Salaries and Wages Payable Notes Payable (long-term) Common Stock Retained Earnings Total Liabilities and Stockholders' Equity Income Statement Service Revenue Salaries and Wages Expense Depreciation Expense Loss on Disposal of Equipment Income Tax Expense $ 6,460 820 4,280 (1,160) $ 10,400 $ 580 580 1,700 4,200 3,340 $ 10,400 $ 1,000 750 500 4,200 1,850 $ 8,300 $ 41,100 38,600 420 470 120 Net Income $ 1,490 Additional Data: a. Bought new equipment for $1,400 cash and sold existing equipment for $420 cash. The equipment that was sold had cost $1,320 and had Accumulated Depreciation of $430 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: Depreciation Expense Changes in Current Assets and Current Liabilities Decrease in Accounts Payable Decrease in Salaries and Wages Payable 0 Net Cash Provided by Operating Activities Cash Flows from Investing Activities: Cash Payments to Purchase Equipment 0 Cash Flows from Financing Activities: Cash Proceeds from Bank Loan 0 Net Cash Provided by Financing Activities Net Increase in Cash during the Year Cash Balance, January 1 Cash Balance, December 31 $ 0