Balance Sheets As of December 31 Year 2 Year 1 Assets Cash Accounts receivable Merchandise inventory Prepaid rent Equipment Accumulated depreciation Land Total assets Liabilities Accounts payable (inventory) Salaries payable Stockholders' equity Common stock, $50 par value Retained earnings Total liabilities and equity $ 71,791 33,205 155, 174 2,310 260,790 (145,170) 198,230 $ 576,330 $ 41,850 24,350 170,690 4,620 289,830 (233,450) 84,930 $ 382,820 $ 64,135 31,430 72,750 26,940 246,000 234,765 $ 576,330 200,000 83, 130 $ 382,820 Income Statement For the Year Ended December 31, Year 2 Sales $1,503,000 Cost of goods sold (798,795) Gross profit 704, 205 Operating expenses Depreciation expense (22,760) Rent expense (20,790) Salaries expense (252,650) Other operating expenses (256,370) Net income $ 151,635 Other Information 1. Purchased land for $113,300. 2. Purchased new equipment for $101,300. 3. Sold old equipment that cost $130,340 with accumulated depreciation of $111,040 for $19,300 cash. 4. Issued common stock for $46,000. Required Prepare the statement of cash flows for Year 2 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) RACEWAY CORPORATION Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flows from operating activities: Plus: Decreases in current assets and increases in current liabilities: Less: Increases in Current Assets and Decreases in current liabilities: Plus: Noncash charges Cash flows from investing activities: Cash flows from financing activities: Ending cash balance