2023 Cash Accounts receivable (net) Inventory Prepaid expenses $ 89,160 2022 $ 24,000 87,000 72,600 80,070 116,070 6,390 6,150 Equipment 147,000 135,000 Accumulated depreciation 31,800 3,000 Accounts payable 29,400 36,600 Wages payable 6,600 17,400 Income taxes payable 2,790 4,230 Notes payable (long-term) 39,000 75,000 Common shares Retained earnings 267,000 207,000 33,030 10,590 Western Environmental Inc. Income Statement For Year Ended June 30, 2023 Sales $777,000 Cost of goods sold 477,000 Gross profit $300,000 Operating expenses: Depreciation expense Other expenses Total operating expenses $70,230 80,310 150,540 Profit from operations Gain on sale of equipment $149,460 600 Profit before taxes Income taxes Profit $150,060 49,460 $100,600 5 Required: Use the Western Environmental Inc. information given below to prepare a statement of cash flows for the year ended June 30, 2023, using the indirect method. (List any deduction in cash and cash outflows as negative amounts.) a. A note is retired at carrying value. b. The only changes affecting retained earnings during 2023 are profit and cash dividends paid. c. New equipment is acquired during 2023 for $64,830. d. The profit on sale of equipment costing $52,830 during 2023 is $600. e. Prepaid expenses and wages expense affect other expenses on the income statement. f. All sales and purchases of merchandise were on credit. WESTERN ENVIRONMENTAL INC. Statement of Cash Flows For Year Ended June 30, 2023 Cash flows from operating activities: Adjustments to reconcile profit to net cash provided by operating activities: Cash flows from investing activities: Cash flows from financing activities: 69