Problem 14-19A (Algo) Using financial statements to prepare a statement of cash flows-indirect method LO 14-1, 14-3, 14-4 The comparative balance sheets and an income statement for Zachary Corporation follow Balance Sheets As of December 31 Year 2 Year 1 Assets Cash Accounts receivable Merchandise inventory Prepaid rent $ 50,509 32,550 $ 38,000 23,870 156,247 2,370. 171,870 4,740 Equipment Accumulated depreciation. Land Total assets Liabilities 255,430 285,400 (139,290) (233,470) 192,720 $ 550,536 80,120 $370,530 Accounts payable (inventory) Salaries payable $ 67,035 76,040 30,077 25,780 Stockholders' equity Common stock, $50 par value Retained earnings Total liabilities and equity 248,500 204,924 $ 550,536 Income Statement For the Year Ended December 31, Year 2 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Rent expense Salaries expense Other operating expenses Net income $1,497,000 (795,606) 701,394 (21,790) (25,630) (258,420) (258,840) $136,714 200,500 68,210 $ 370,530 Other Information 1. Purchased land for $112,600. 2. Purchased new equipment for $105,000. 3. Sold old equipment that cost $134,970 with accumulated depreciation of $115,970 for $19,000 cash. 4. Issued common stock for $48,000.