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 5,750 2, 600 11,000 (1, 600) $17,750 s 1, 100 1,050 1,000 11,000 $10,940 1, 500 12,100 (2,010) Total Assets $22,530 600 640 2,100 11,000 8, 190 $22,530 Accounts Payable Salaries and Uages Payable Note Payable (long-term) Common Stock Retained Earnings Total Liabilities and Stockholders' Equity $17,750 Income Statement Service Revenue Salaries and ages Expense Depreciation Expense Income Tax Expense Net Income $69, 600 63, 500 410 5 s 4, 590 Additional Data: a Bought new golf clubs using cash, $1,100 Ned,> Prev 4 of 10 Additional Date: a Bought new golf clubs using cash, $1,100 b Borrowed $1,100 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 current year ended December 31 using the direct method. TIP Remember to exclude depreciation expense when converting to the cash basis (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 Next > 4 of 10