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 Year Previous Year Balance Sheet at December 31 Cash Accounts Receivable Equipment Accumulated Depreciation-Equipment 6,250 2,800 12,000 (1,800) $19,250 s 1,300 1, 150 1,000 12,000 3,800 $11, 620 1, 600 12,300 (1,790) Total Assets $23,730 Accounts Payable Salaries and Uages Payable Note Payable (long-term) Common Stock Retained Earnings s 800 720 2,300 12,000 7,910 $23, 730 $19,250 Total Liabilities and Stockholders' Equity Income Statement $70,800 64,500 660 330 1,200 s 4, 110 Service Revenue Salaries and Wages Expense Depreciation Expense Loss on Disposal ot Equipment Income Tax Expense Net Income 5 Additional Data: Net Income 4,110 Additional Data a Bought new golf clubs for $2,300 cash and sold existing clubs for $1,000 cash. The clubs that were sold had cost $2,000 and had Accumulated Depreciation of $670 at the time of sale. b Borrowed $1,300 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 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 with a minus sign.) SOFT TOUCH 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 Next >