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 Inventory $64,764 33,273 $40,230 24,400 156,911 172,600 Prepaid rent 2,290 4,580 Equipment 251,440 288,950 Accumulated depreciation (147,990) (238,460) Land 196,990 83,390 Total assets $557,678 $375,690 Liabilities Accounts payable (inventory) $64,029 72,630 Salaries payable 24,115 20,670 Stockholders' equity Common stock, $50 par value 254,000 201,000 Retained earnings 215,534 81,390 Total liabilities and equity $557,678 $375,690 Income Statement For the Year Ended December 31, Year 2 Sales $1,497,000 Cost of goods sold (795,606) Gross profit 701,394 Operating expenses Depreciation expense (23,940) Rent expense (26,610) Salaries expense (257,660) Other operating expenses (259,040) Net income $134,144 Other Information 1. Purchased land for $113,600. 2. Purchased new equipment for $95,400. 3. Sold old equipment that cost $132,910 with accumulated depreciation of $114,410 for $18,500 cash. 4. Issued common stock for $53,000.