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 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 $ 70,142 27,300 157,774 2,315 254,830 (141,850) 195,700 $ 566,211 $ 38,050 20.020 173,550 4,630 288,730 (230,290) 84,500 $ 379,190 $ 63,024 29, 155 71,490 24,990 247,500 226,532 $ 566,211 201,500 81,210 $ 379,190 Income Statement For the Year Ended December 31, Year 2 Sales $1,505,000 Cost of goods sold (799,858) Gross profit 705, 142 Operating expenses Depreciation expense (24,060) Rent exp (22,330) Salaries expense (255,170) Other operating expenses (258,260) Net income $ 145,322 Other Information 1. Purchased land for $111,200. 2. Purchased new equipment for $98,900. 3. Sold old equipment that cost $132,800 with accumulated depreciation of $112,500 for $20,300 cash. 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 $ 0 Cash flows from investing activities 0 Cash flows from financing activities: 0 0 Ending cash balance $ 0