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 $ 38,160 21,360 171,229 4,790 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 $ 59,329 29,127 155,656 2,195 255,940 ( 148,770) 193,200 $ 546,877 285,919 (239,348) 79, 280 $361,480 $ 62,945 28,070 71,400 24,069 252,500 293, 362 $ 546,877 198,500 67,440 $ 361,460 Income statement For the Year Ended December 31, Year 2 Sales $1,585,980 Cost of goods sold (799,858) Gross profit 785,142 Operating expenses Depreciation expense (22,660) Rent expense (28,500) Salaries expense (259,450) other operating expenses (259,199) Net income $ 135,922 1. Purchased land for $113,900. 2 Purchased new equipment for $103,600. 3. Sold old equipment that cost $133,570 with accumulated depreciation of $112,570 for $21,000 cash. 4. Issued common stock for $54,000. Required Prepare the statement of cash flows for Year 2 using the Indired method. (Amounts to be deducted should be 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 Cash flows from investing activities: Cash flows from financing activities