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. e Pnacu Balance Sheet at December 31 Cash Accounts Receivable Equipment $ 6,300 $ 4.400 1,850 6,0505,500 Accumulated Depreciation-Equipment (1.600)(1.300) 950 $11,700 $10.450 Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings $650 $1,200 750 500 5.500 l5,500 3,5002,500 450 1,600 $ 11,700 $10,450 Income Statement Service Revenue Salaries and Wages Expense Depreciation Expense Income Tax Expense $38,500 36,000 300 1,200 Net Income $ 1,000 Additional Data: a. Bought new hockey equipment for cash, $550. b. Borrowed $1,100 cash from the bank during the year c. Acounts 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. 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.) 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 Adjustments to Reconcile Net Income to Net Casth Provided b Activities: Cash Flows from Investing Activities: Cash Flows from Financing Activites