ICE Drilling Inc.'s balance sheet information and income statement are as follows: $1,112,200 563,000 $ 549,200 ICE Drilling Inc. Income Statement For Year Ended December 31, 2020 Sales Cost of goods sold Gross profit Operating expenses: Depreciation expense $ 45,000 Other expenses 306, 360 Total operating expenses Profit from operations Loss on sale of equipment Profit before taxes Income taxes Profit 351, 360 $ 197,840 12,080 $ 185,760 27,760 $ 158,000 ICE Drilling Inc. Comparative Balance Sheet Ser 31 2019 Cash $ 680 $ 174,640 Accounts receivable 148,600 114,160 Merchandise inventory 616,200 568,600 Prepaid expenses 12,070 17,000 Equipment 357,880 249,400 Accumulated depreciation 80,560 101,560 Accounts payable 195,030 255,840 Current notes payable 25,400 17,000 Notes payable 210,000 121,000 Common shares 453,800 353,000 Retained earnings 293,640 275,400 dditional information regarding ICE Drilling's activities during 2020: Loss on sale of equipment is $12,080. Paid $70,880 to reduce a long-term note payable. Equipment costing $108,000, with accumulated depreciation of $66,000, is sold for cash. Equipment costing $216,480 is purchased by paying cash of $56,600 and signing a long-term note payable for the balance, Borrowed $8,400 by signing a short-term note payable. Issued 10,080 common shares for cash at $10 per share. Additional information regarding ICE Drilling's activities during 2020: 1. Loss on sale of equipment is $12,080. 2. Paid $70,880 to reduce a long-term note payable. 3. Equipment costing $108,000, with accumulated depreciation of $66.000, is sold for cash 4. Equipment costing $216,480 is purchased by paying cash of $56,600 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 $139,760. 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.) CE DRILLING INC. of Cash Flows For December 31, 2020 Cash flows from operating activities: Adjustments to reconcile profit to net cash inflows from operating activities: Cash flows from investing activities: Cash flows from financing activities: 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 ormeandise increases caused by the sale of merchandise Prepaid expenses: ? increases caused by the purchase of prepaid items, i.e., such as the payment of rent or insurance in advance 2 decreases caused by the use of prepaid expenses 2 decreases caused by the purchase of prepaid items, i.e., such as the payment of rent or insurance in advance 2 increases caused by the use of prepaid expenses Notes payable: increases caused by the issuance of debt (borrowing) ? decreases caused by principal payments
