Exercise 16-7 Preparing the statement of cash flows (indirect method) LO2, 5, 6 Western Environmental Inc. Comparative Balance Sheet Information June 30 2020 2019 Cash $ 91,360 $ 42,400 Accounts receivable (net) 98,000 74,800 Inventory 80, 180 116, 189 Prepaid expenses 6,500 6,260 Equipment 158, eee 146,000 Accumulated depreciation 34,000 14,000 Accounts payable 31,600 38,8ee Wages payable 8,800 19,600 Income taxes payable 2,900 4,340 Notes payable (long-term) 50, eee 86,000 Common shares 278, eee 218, eee Retained earnings 28,740 4,900 Western Environmental Inc. Income Statement For Year Ended June 30, 2020 Sales Cost of goods sold $788,000 479,200 Common shares Retained earnings 278,000 28,740 218,000 4,900 $788,000 479, 280 $308,800 Western Environmental Inc. Income Statement For Year Ended June 30, 2020 Sales Cost of goods sold Gross profit Operating expenses: Depreciation expense $ 70, 340 Other expenses 80,420 Total operating expenses Profit from operations Gain on sale of equipment Profit before taxes Income taxes Profit 150,760 $ 158,040 2,800 $160,840 58,840 $102,800 Required: Use the Western Environmental Inc. Information given below to prepare a statement of cash flows for the ye using the indirect method. (List any deduction in cash and cash outflows as negative amounts.) a. A note is retired at carrvina value Help Save Required: Use the Western Environmental Inc. Information given below to prepare a statement of cash flows for the year ended June 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 2020 are profit and cash dividends paid. c. New equipment is acquired during 2020 for $71.540 d. The profit on sale of equipment costing $59,540 during 2020 is $2,800. e. Prepaid expenses and wages expense affect other expenses on the income statement f. All sales and purchases of merchandise were on credit 27 WESTERN ENVIRONMENTAL INC. Statement of Cash Flows For Year Ended June 30, 2020 Cash flows from operating activities Adjustments to reconcile profitto nel cash provided by operating activities