The comparative balance sheets and an income statement forRaceway Corporation follow.
Balance Sheets
As of December 31 |
| Year 2 | | Year 1 | |
| Assets | | | | | | | | |
| Cash | $ | 71,084 | | | $ | 41,770 | | |
| Accounts receivable | | 30,368 | | | | 22,270 | | |
| Merchandise inventory | | 156,692 | | | | 172,360 | | |
| Prepaid rent | | 2,460 | | | | 4,920 | | |
| Equipment | | 260,140 | | | | 287,240 | | |
| Accumulated depreciation | | (148,440 | ) | | | (239,840 | ) | |
| Land | | 192,720 | | | | 80,320 | | |
| Total assets | $ | 565,024 | | | $ | 369,040 | | |
| Liabilities | | | | | | | | |
| Accounts payable (inventory) | $ | 61,746 | | | | 70,040 | | |
| Salaries payable | | 33,367 | | | | 28,600 | | |
| Stockholders’ equity | | | | | | | | |
| Common stock, $50 par value | | 251,500 | | | | 198,500 | | |
| Retained earnings | | 218,411 | | | | 71,900 | | |
| Total liabilities and equity | $ | 565,024 | | | $ | 369,040 | | |
|
Income Statement
For the Year Ended December 31, Year 2 |
| Sales | $ | 1,499,000 | | |
| Cost of goods sold | | (796,669 | ) | |
| Gross profit | | 702,331 | | |
| Operating expenses | | | | |
| Depreciation expense | | (21,400 | ) | |
| Rent expense | | (24,340 | ) | |
| Salaries expense | | (251,660 | ) | |
| Other operating expenses | | (258,420 | ) | |
| Net income | $ | 146,511 | | |
|
Other Information
- Purchased land for $112,400.
- Purchased new equipment for $104,900.
- Sold old equipment that cost $132,000 with accumulateddepreciation of $112,800 for $19,200 cash.
- Issued common stock for $53,000.
Required
Prepare the statement of cash flows for Year 2 using the indirectmethod. (Amounts to be deducted should be indicated with aminus sign.)
