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 Balance Sheet at December 31 Current Year Previous Year Cash $ 13,680 $ 8,500 Accounts Receivable 2,600 3,700 Equipment 13,200 12,000 Accumulated Depreciation Equipment (3,220) (2.700) Total Assets $26,260 $ 21,500 Accounts Payable $ 1,200 $ 2,200 Salaries and Wages Payable 1,880 1,600 Notes Payable (long-term) 3,200 1,000 Common Stock 12,800 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: a. Bought new golf clubs using cash, $1,200. b. Borrowed $2,200 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 lability 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 Indirect method. (Amounts to be deducted SOFT TOUCH COMPANY $ 4,160 960 x Statement of Cash Flows For the Year Ended December 31 Cash Flows from Operating Activities: Net Income Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation Expense Changes in Current Assets and Current Liabilities Decrease in Accounts Receivable Decrease in Accounts Payable Decrease in Salaries and Wages Payable Cash Payments to Purchase Equipment X Net Cash Provided by Operating Activities Cash Flows from Investing Activities: Cash Payments to Purchase Equipment 1,100 (1,000) (520) 480 5,180 (3,200) 1,000 (2,200) Net Cash Used in Investing Activities Cash Flows from Financing Activities: Cash Proceeds from Bank Loan 2,200 Net Cash Provided by Financing Activities Net Increase in Cash during the Year Cash Balance, January 1 Cash Balance, December 31 2,200 5,180 8,500 $ 13,680