ICE Drilling Inc.'s balance sheet information and income statement are as follows: $1, 111, 400 559,000 $ 552, 400 ICE Drilling Inc. Income Statement For Year Ended December 31, 2020 Sales Cost of goods sold Gross profit Operating expenses: Depreciation expense $ 41,000 Other expenses 305, 560 Total operating expenses Profit from operations Loss on sale of equipment Profit before taxes Income taxes Profit 346, 560 $ 205, 840 11, 280 $ 194, 560 26, 960 $ 167, 600 ICE Drilling Inc. Comparative Balance Sheet Information December 31 2020 2019 Cash $ 110, 680 $ 170, 640 Accounts receivable 144, 600 110, 160 Merchandise inventory 612, 200 564, 600 Prepaid expenses 12,030 15,000 Equipment 357, 080 245, 400 Accumulated depreciation 76,560 97,560 Accounts payable 189, 190 265, 040 Current notes payable 21,400 13,000 Notes payable 210,000 120, 200 Common shares 449, 800 349,000 Retained earnings 289, 640 261,000 Additional information regarding ICE Drilling's activities during 2020: 1. Loss on sale of equipment is $11,280. 2. Paid $70,080 to reduce a long-term note payable. 3. Equipment costing $104,000, with accumulated depreciation of $62,000, is sold for cash. 4. Equipment costing $215,680 is purchased by paying cash of $55,800 and signing a long-term note payable for the balance. 5. Borrowed $8,400 by signing a short-term note payable. 6. Issued 10,080 common shares for cash at $10 per share. 7. Declared and paid cash dividends of $138,960. Required: Prepare a statement of cash flows for 2020 that reports the cash inflows and outflows from operating activities according to the indirect method. (List any deduction in cash and cash outflows as negative amounts.) ICE DRILLING INC. Statement of Cash Flows For Year Ended December 31, 2020 Cash flows from operating activities: Profit Adjustments to reconcile profit to net cash inflows from operating activities: Depreciation expense Loss on sale of equipment Increase in accounts receivable Increase in merchandise inventory Decrease in prepaid expenses Decrease in accounts payable $ 0 Net cash inflow from operating activities Cash flows from investing activities: Cash paid for equipment Cash received from sale of equipment 0 Net cash outflow from investing activities Cash flows from financing activities: Cash paid on notes payable Cash received from issuing common shares Cash paid for dividends Cash borrowed on current notes payable 0 Net cash outflow from financing activities Net decrease in cash Cash balance at beginning of 2020 Cash balance at end of 2020 $ 0 Analysis Component: Merchandise Inventory, Prepaid Expenses, Notes Payable, and Common Shares are some of the accounts that changed during 2020. Indicate what transactions likely caused each of these accounts to increase and/or decrease. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) Merchandise inventory: increases caused by the purchase of merchandise decreases caused by the purchase of merchandise decreases caused by the sale of merchandise increases caused by the sale of merchandise Prepaid expenses: 7 increases caused by the purchase of prepaid items, i.e., such as the payment of rent or insurance in advance ? decreases caused by the use of prepaid expenses decreases caused by the purchase of prepaid items, i.e., such as the payment of rent or insurance in advance 7 increases caused by the use of prepaid expenses Notes payable: increases caused by the issuance of debt (borrowing) decreases caused by principal payments ? decreases caused by the issuance of debt (borrowing) Common shares: 7 increases caused by the issuance of shares and/or share dividends 2 decreases caused by the repurchase and/or cancellation of shares 2 decreases caused by the issuance of shares and/or share dividends 1 increases caused by the repurchase and/or cancellation of shares