131 Question 2 Western Environmental Inc. Western Environmental Inc. Comparative Balance Sheet Information Income Statement June 30 M m For Year Ended June 30,2020 Cash 89,760 30,000 Sales 780,000 Accounts receivable (net) 90,000 73,200 Cost of goods sold 477,600 Inventory 80,100 116,100 Gross prot 302,400 Prepaid expenses 6,420 6,180 Operating expenses: Equipment 150,000 138,000 Depreciation expense 70,260 Accumulated depreciation 32,400 6,000 Other expenses 80,340 Accounts payable 30,000 37,200 Total operating expenses 150,600 Wages payable 7,200 18,000 Prot from operations 151,800 Income taxes payable 2,820 4,260 Gain on sale of equipment 1,200 Notes payable (Iongtenn) 42,000 78,000 Prot before taxes 153,000 Common shares 270,000 210,000 Income taxes 51,800 Retained earnings 31,860 10,020 Prot 101,200 Required: Use the Western Environmental Inc. information given below to prepare a statement of cash ows for the year ended June 30, 2020, using the indirect method. (List any deduction in cash and cash outows as a negavtive amounts) 3. A note is retired at carrying value. I _| b. The only changes affecting retained earnings during 2020 are prot and cash dividends paid. c. New equipment is acquired during 2020 for $66,660. d. The prot on sale of equipment costing $54,660 during 2020 is $1,200. a. Prepaid expenses and wages expense affect other expenses on the income statement. I. All sales and purchases of merchandise were on credit