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 $71,317 $40,690 32,946 24,160 Inventory Prepaid rent 158,047 173,850 2,255 4,510 Equipment 248,310 285,090 Accumulated depreciation (152,400) (238,720) Land 187,900 76,000 Total assets $548,375 $365,580 Liabilities Accounts payable (inventory) $67,635 76,720 Salaries payable 25,865 22,170 Stockholders' equity Common stock, $50 par value 251,500 200,500 Retained earnings 203,375 66,190 Total liabilities and equity $548,375 $365,580 Income Statement For the Year Ended December 31, Year 2 Sales Cost of goods sold Gross profit $1,496,000 (795,075) 700,925 Operating expenses Depreciation expense Rent expense Salaries expense Other operating expenses Net income Other Information 1. Purchased land for $111,900. 2. Purchased new equipment for $95,600. (24,060) (25,030) (256,850) (257,800) $137,185 3. Sold old equipment that cost $132,380 with accumulated depreciation of $110,380 for $22,000 cash. 4. Issued common stock for $51,000.