Problem 12-19A Using financial statements to prepare a statement of cash 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 $ 69,971 32,318 158,602 2,475 257,850 (141,110) 189,700 $ 569,806 $ 41,110 23,789 1 74,460 4,95 286,460 (231,830) 79,480 $ 378,250 $ 67,829 33,693 7 6,940 28,880 245,000 223,284 5 569,806 199, eee 73, 430 $ 378,250 Income Statement For the Year Ended December 31, Year 2 Sales $1,584,000 Cost of goods sold (799,326) Gross profit 784,674 Operating expenses Depreciation expense (21,590) Rent expense (20,550) Salaries expense (253,210) Other operating expenses (259,470) Net income 149,854 Other Information 1. Purchased land for $110,300. 2. Purchased new equipment for $102,100. 3. Sold old equipment that cost $130,710 with accumulated depreciation of $112,310 for $18,400 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 she sign.) RACEWAY CORPORATION Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flows from operating activities: Plus: Increases in current assets and Decreases 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