PA12-4 Preparing and Interpreting a Statement of Cash Flows (Indirect Method) [LO 12 2, LO 12-3, LO 12-4, LO 12-5] 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 Previous Year Year Balance Sheet at December 31 $ 6,420 4,240 960 1,870 6,160 5,600 Cash Accounts Receivable Equipment Accumulated Depreciation-Equipment (1,620) (1,310) $11,920 $10,400 $ 440 $1,000 750 500 5,600 5,600 3,740 2,550 Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings 440 1,700 $11,920 $10,400 Income Statement Service Revenue Salaries and Wages Expense Depreciation Expense Income Tax Expense $38,700 36,200 1,000 $1,190 Net Income Additional Data: a. Bought new hockey equipment for cash, $560 b. Borrowed $1,200 cash from the bank during the year .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 current year ended December 31 using the indirect method (Amounts to be deducted should be indicated with a minus sign.) a. Bought new hockey equipment for cash, 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 current 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: 1.190 Net Income Adjustments to Reconcile Net Income to Net Cash Activities Depreciation Expense 1,190 Cash Flows from Investing Activities: Cash Flows from Financing Activities 0 Ace