ICE Drilling Inc.'s balance sheet information and income statement are as follows: ICE Drilling Inc. Income Statement For Year Ended December 31, 2020 Sales Cost of goods sold Gross profit Operating expenses: Depreciation expense. Other expenses Total operating expenses Profit from operations Loss on sale of equipment Profit before taxes" Income taxes Profit $1,110,200 553,000 $ 557,200 $ 35,000 304,360 ICE Drilling Inc. Comparative Balance Sheet Information 339,360 $ 217,840 10,080 $ 207,760 25,760 $ 182,000 2020 December 31 2019 Cash Accounts receivable Merchandise inventory ICE Drilling Inc. Comparative Balance Sheet Information December 31 2020 $ 104,680 138,600 606,200 2019 $ 164,640 104,160 558,600 Prepaid expenses 11,970 13,000 Equipment 355,880 239,400 Accumulated depreciation 70,560 91,560 Accounts payable 193,930 279,840 Current notes payable. 15,400 7,000 Notes payable 210,000 119,000 Common shares 443,800 343,000 Retained earnings 283,640 239,400 Additional information regarding ICE Drilling's activities during 2020: 1. Loss on sale of equipment is $10,080. 2. Paid $68,880 to reduce a long-term note payable. 3. Equipment costing $98,000, with accumulated depreciation of $56,000, is sold for cash. 4. Equipment costing $214,480 is purchased by paying cash of $54,600 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 $137,760. 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 Adjustments to reconcile profit to net cash inflows from operating activities Cash flows from investing 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 of merchandise 7 increases caused by the sale of merchandise repaid expenses: Help Prepaid expenses: increases caused by the purchase of prepaid items, Le, such as the payment of rent or insurance in advance 2 decreases caused by the use of prepaid expenses 7decreases caused by the purchase of prepaid items, Le, such as the payment of rent or insurance in advance increases caused by the use of prepaid expenses Notes payable: 7 increases caused by the issuance of debt (borrowing) ? decreases caused by principal payments ? decreases caused by the issuance of debt (borrowing) 7 increases caused by principal payments pricipal payments Common shares: ? increases caused by the issuance of shares and/or share dividends ? decreases caused by the repurchase and/or cancellation of shares ? decreases caused by the issuance of shares and/or share dividends increases caused by the repurchase and/or cancellation of shares < Prev 4 of 5 Next >