Using financial statements to prepare a statement of cash flows'Direct method The following financial statements were drawn from the records of Raceway Sports:

Additional Information
1. Sold equipment costing $108,000 with accumulated depreciation of $84,000 for $22,200 cash.
2. Paid a $13,600 cash dividend to owners.
Required
Analyze the data and prepare a statement of cash flows using the direct method.

Balance Sheets As of December 31 2012 2011 Assets Cash $ 28,200 66,000 114,000 30,000 255,000 (141,000) 52,500 $404,700 $123,600 57,000 126,000 Accounts receivable Inventory Notes receivable (long-term) Equipment Accumulated depreciation-equipment Land 147,000 (74,740) 82,500 $461,360 Total assets Liabilities and equity Accounts payable (inventory) Salaries payable Utilities payable Interest payable Notes payable (long-term) Common stock $ 42,000 30,000 $ 48,600 24,000 1,200 1,800 60,000 240,000 29,100 $404,700 600 300,000 88,760 $461,360 Retained earnings Total liabilities and equity Income Statement For the Year Ended December 31, 2012 Sales revenue $580,000 (288,000) 292,000 Cost of goods sold Gross margin Operating expenses Salary expense Depreciation expense Utilities expense (184,000) (17,740) (12,200) Operating income Nonoperating items Interest expense Loss on the sale of equipment 78,060 (3,000) (1,800) $ 73,260 Net income