Soft Touch Company was started several years ago by two golf instructors. The companys comparative balance sheets and income statement are presented below, along with additional information.

	Current Year	Previous Year
Balance Sheet at December 31
Cash	$ 13,680	$ 8,500
Accounts Receivable	2,600	3,700
Equipment	13,200	12,000
Accumulated DepreciationEquipment	(3,220)	(2,700)
Total Assets	$ 26,260	$ 21,500
Accounts Payable	$ 1,200	$ 2,200
Salaries and Wages Payable	1,080	1,600
Notes Payable (long-term)	3,200	1,000
Common Stock	12,000	12,000
Retained Earnings	8,780	4,700
Total Liabilities and Stockholders Equity	$ 26,260	$ 21,500
Income Statement
Service Revenue	$ 75,800
Salaries and Wages Expense	69,000
Depreciation Expense	520
Income Tax Expense	2,200
Net Income	$ 4,080

Additional Data:

1. Bought new golf clubs using cash, $1,200.
2. Borrowed $2,200 cash from the bank during the year.
3. 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.)