Heads Up Company was started several years ago by two hockey instructors. The companys comparative balance sheets

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.

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 year ended December 31, 2013, using the indirect method.
2. Use the statement of cash flows to evaluate the company’s cashflows.

Transcribed Image Text:

2013 2012 Balance Sheet at December 31 as Accounts Receivable Equipment Less: Accumulated Depreciation $6,300 900 5,500 (1,500) $11,200 $4,000 1,750 5,000 (1,250) $9,500 Accounts Payable Wages Payable Long-Term Bank Loan Payable Contributed Capital Retained Earnings $ 500 $1,000 750 500 5,000 2,250 $11,200 $9,500 500 1,700 5,000 3,500 Income Statement for 2013 Lessons Revenue Wages Expense Depreciation Expense Income Tax Expense Net Income $37,500 35,000 250 1,000 $1,250