Problem 12-19A (Algo) Using financial statements to prepare a statement of cash flows-indirect method LO 12-1, 12-3, 12-4 The comparative balance sheets and an income statement for Raceway Corporation follow. Assets Cash Accounts receivable Inventory Balance Sheets As of December 31 Year 2 Year 1 $65, 159 $38,730 31,268 22,938 Prepaid rent Equipment Accumulated depreciation Land Total assets Liabilities Accounts payable (inventory) Salaries payable Stockholders' equity Common stock, $50 par value Retained earnings 157,965 2,425 255, 980 (153,090) 187,650 $547, 357 $62,098 33,495 252,000 199,764 $547, 357 173,760 4,850 286, 720 (238,870) 76, 150 $364, 270 70,440 28,718 201, 000 64, 120 $364,270 Total liabilities and equity Income Statement For the Year Ended December 31, Year 2 Sales $1,497,000 Cost of goods sold Gross profit Operating expenses Depreciation expense Rent expense Salaries expense (795, 606) 701,394 (22,768) (26, 270) (258, 330) other operating expenses (258, 390) Net income $135,644 Other Information 1. Purchased land for $111,500. 2. Purchased new equipment for $99,500. 3. Sold old equipment that cost $130,240 with accumulated depreciation of $108,540 for $21,700 cash. 4. Issued common stock for $51,000. Required Prepare the statement of cash flows for Year 2 using the indirect method. (Cash outflows should be indicated with a minus sign.) RACEWAY CORPORATION Cash flows from operating activities: RACEWAY CORPORATION Statement of Cash Flows For the Year Ended December 31, Year 2 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 +