ICE Drilling Inc.?s balance sheet information and income statement are as follows:

Additional information regarding ICE Drilling?s activities during 2020:

1. Loss on sale of equipment is $11,480.

2. Paid $70,280 to reduce a long-term note payable.

3. Equipment costing $105,000, with accumulated depreciation of $63,000, is sold for cash.

4. Equipment costing $215,880 is purchased by paying cash of $56,000 and signing a long-term note payable for the balance.

5. Borrowed $8,400 by signing a short-term note payable.

6. Issued 5,600 common shares for cash at $18 per share.

7. Declared and paid cash dividends of $139,160.

Required

Prepare a statement of cash flows for 2020 that reports the cash inflows and outflows from operating activities according to the indirect method. Show your supporting calculations. Also prepare a note describing non-cash investing and financing activities.

Analysis Component: Merchandise Inventory, Prepaid Expenses, Notes Payable, and Common Shares are some of the accounts that changed during 2020. Explain what transactions likely caused each of these accounts to increase and/or decrease.

Transcribed Image Text:

ICE Drilling Inc. Comparative Balance Sheet Information ICE Drilling Inc. Income Statement Tools Help For Year Ended December 31, 2020 December 31 Sales. 1,111,600 2019 2020 Cost of goods sold. 560,000 $120,680 $171,640 Cash. Gross profit. 551,600 Accounts receivable. 145,600 111,160 Operating expenses: Merchandise inventory. 613,200 565,600 42,000 Depreciation expense Prepaid expenses 12,040 14,000 Other expenses. 305,760 Equipment. Accumulated depreciation 357,280 246,400 Total operating expenses.. Profit from operations.. Loss on sale of equipment. 347,760 77,560 98,560 203,840 197,400 261,240 Accounts payable. 11,480 Current notes payable. Notes payable. 22,400 14,000 Profit before taxes. 192,360 210,000 120,400 27,160 Income taxes. Common shares 450,800 350,000 profit Profit 165,200 Retained earnings. 290,640 264,600