PA12-4 (Static) 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 incom- statement follow, along with additional information. Balance Sheet at December 31 Current Year Previous Year Cash $ 6,300 $ 4,000 Accounts Receivable 900 1,750 Equipment 5,500 5,000 Accumulated Depreciation Equipment (1,500) (1,250) Total Assets $ 11,200 $ 9,500 Accounts Payable $ 500 $ 1,800 Salaries and Wages Payable 500 750 Notes Payable (long-term) 1,700 500 Common Stock 5,000 5,000 Retained Earnings 3,500 2,250 Total Liabilities and Stockholders' Equity $ 11,200 $ 9,500 Income Statement Service Revenue $ 37,500 Salaries and Wages Expense 35,000 Depreciation Expense 250 Income Tax Expense 1,000 Net Income $ 1,250 Additional Data: Additional Data: a Bought new hockey equipment for cash, $500. 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: Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Changes in Current Assets and Current Liabilities Cash Flows from Operating Activities: Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Changes in Current Assets and Current Liabilities Cash Flows from Investing Activities: Cash Flows from Financing Activities