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Soft Touch Company was started several years ago by two golf instructors. The company's comparative balance sheets and income statement are presented below, along with additional information. Current Previous Year Year Balance Sheet at December 31 Cash Accounts Receivable Equipment $12,700 6,750 3,000 10,000 Accumulated Depreciation Equipment 2,450) (2,000) 1,600 11,000 $22,850 $17,750 Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings $1,000 S 1,500 1,250 1,000 10,000 4,000 800 2,500 10,000 8,550 $22,850 $17,750 Income Statement Service Revenue Salaries and Wages Expense Depreciation Expense Income Tax Expense $72,000 65,500 450 1,500 Net Income S 4,550 Additional Data: a. Bought new golf clubs using cash, $1,000 b. Borrowed $1,500 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