ICE Drilling Inc.s balance sheet information and income statement are as follows: ICE Drilling Inc. Income Statement For Year Ended December 31, 2017 Sales $ 1,111,000 Cost of goods sold 557,000 Gross profit $ 554,000 Operating expenses: Depreciation expense $ 39,000 Other expenses 305,160 Total operating expenses 344,160 Profit from operations 209,840 Loss on sale of equipment 10,880 Profit before taxes $ 198,960 Income taxes 26,560 Profit $ 172,400 ICE Drilling Inc. Comparative Balance Sheet Information December 31 2017 2016 Cash $ 108,680 $ 168,640 Accounts receivable 142,600 108,160 Merchandise inventory 610,200 562,600 Prepaid expenses 12,010 15,000 Equipment 356,680 243,400 Accumulated depreciation 74,560 95,560 Accounts payable 190,770 270,640 Current notes payable 19,400 11,000 Notes payable 210,000 119,800 Common shares 447,800 347,000 Retained earnings 287,640 253,800 Additional information regarding ICE Drillings activities during 2017: 1. Loss on sale of equipment is $10,880. 2. Paid $69,680 to reduce a long-term note payable. 3. Equipment costing $102,000, with accumulated depreciation of $60,000, is sold for cash. 4. Equipment costing $215,280 is purchased by paying cash of $55,400 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 $138,560. Required: Prepare a statement of cash flows for 2017 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.) Analysis Component: Merchandise Inventory, Prepaid Expenses, Notes Payable, and Common Shares are some of the accounts that changed during 2017. 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: 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 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) increases caused by principal payments