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. Balance Sheet at December 31 Cash Accounts Receivable Equipment Less: Accumulated Depreciation Current Year Prior Year $ 6,000 $ 4,000 1,000 1,750 5,500 5,000 (1,500) (1,250) Accounts Payable Wages Payable Long-Term Bank Loan Payable Contributed Capital Retained Earnings $11,000 $ 9,500 $ 500 $ 1,000 500 1,500 750 500 5,000 5,000 3,500 2,250 $11,000 $ 9,500 Income Statement (current year) Lessons Revenue Wages Expense Depreciation Expense Loss on Disposal of Equipment Income Tax Expense Net Income $37,500 35,000 500 550 200 $ 1,250 Additional Data: a. Company bought new equipment for $1,800 cash and sold existing equipment for $500 cash. The equipment that was sold was purchased for $1,300 and had Accumulated Depreciation of $250 at the time of sale. 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 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: Adjustments to reconcile net income to net cash provided by operating activities: 0 Cash flows from investing activities: 0 Cash flows from financing activities: Net increase in cash during the year Cash balance, January 1 Cash balance, December 31 0 $ 0