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 $70,071 $38,160 33,668 24,690 156,665 172,330 Prepaid rent 2,410 4,820 Equipment 251,140 285,050 Accumulated depreciation (142,700) (237,120) Land 189,490 76,390 Total assets $560,744 $364,320 Liabilities Accounts payable (inventory) $68,199 77,360 Salaries payable 34,720 29,760 Stockholders' equity Common stock, $50 par value 252,000 198,000 Retained earnings 205,825 59,200 Total liabilities and equity $560,744 $364,320 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 (20,490) Rent expense (24,350) Salaries expense (253,940) Other operating expenses (258,800) Net income $146,625 Other Information 1. Purchased land for $113,100. 2. Purchased new equipment for $100,600. 3. Sold old equipment that cost $134,510 with accumulated depreciation of $114,910 for $19,600 cash. 4. Issued common stock for $54,000. 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: $ 0 0 0 0