Problem 12-19A 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.

Balance Sheets As of December 31
	Year 2				Year 1
Assets
Cash	$	68,701			$	41,640
Accounts receivable		32,373				23,740
Merchandise inventory		157,738				173,510
Prepaid rent		2,490				4,980
Equipment		247,960				286,360
Accumulated depreciation		(142,570	)			(234,820	)
Land		194,230				79,330
Total assets	$	560,922			$	374,740
Liabilities
Accounts payable (inventory)	$	67,882				77,000
Salaries payable		33,145				28,410
Stockholders equity
Common stock, $50 par value		249,000				198,000
Retained earnings		210,895				71,330
Total liabilities and equity	$	560,922			$	374,740

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		(21,450	)
Rent expense		(25,490	)
Salaries expense		(258,850	)
Other operating expenses		(258,850	)
Net income	$	139,565

Other Information

1. Purchased land for $114,900.
2. Purchased new equipment for $96,000.
3. Sold old equipment that cost $134,400 with accumulated depreciation of $113,700 for $20,700 cash.
4. Issued common stock for $51,000.

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