ICE Drilling Inc.

Comparative Balance Sheet Information

December 31

2014 2013

Cash............................................... $120,680 $171,640

Accounts receivable ........................ 145,600 111,160

Merchandise inventory.................... 613,200 565,600

Prepaid expenses............................ 1 2,040 14,000

Equipment....................................... 357,280 246,400

Accumulated depreciation............... 77,560 98,560

Accounts payable............................ 197,400 261,240

Short-term notes payable................ 22,400 14,000

Long-term notes payable................ 210,000 120,400

Common shares.............................. 450,800 350,000

Retained earnings............................ 290,640 264,600

ICE Drilling Inc.

Income Statement

For Year Ended December 31, 2014

Sales ..................................................................... $1,111,600

Cost of goods sold ................................................ 560,000

Gross profit .......................................................... $ 551,600

Operating expenses:

Depreciation expense.................$ 42,000

Other expenses............................ 305,760

Total operating expenses...................................... 347,760

Loss on sale of equipment.................................... 11,480

Income from operations...................................... $ 192,360

Income taxes......................................................... 27,160

Net income............................................................ $ 165,200

Required: Prepare a statement of cash flows for 2014 using the direct method to report cash inflows and outflows from operating activities.

Other information:

a. All sales are credit sales,

b. All credits to accounts receivable in the period are receipts from customers.

c. Purchases of merchandise are on credit.

d. All debits to accounts payable in the period result from payments for merchandise.

e. The only decrease in income taxes payable is for payment of taxes.

f. The other expenses are paid in advance and are initially debited to Prepaid Expense.