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 ICE Drilling Inc. $1,110,400 554,000 $ 556,400 $ 36,000 304,560 Comparative Balance Sheet Information 340,560 $ 215,840 10,280 $ 205,560 25,960 $ 179,600 December 31 2020 2019 Cash $ 105,680 $ 165,640 Accounts receivable 139,600 105,160 Merchandise inventory 607,200 559,600 Prepaid expenses 11,980 14,000 Equipment 356,080 240,400 Accumulated depreciation 71,560 92,560 Accounts payable 193,140 278,040 Current notes payable 16,400 8,000 Notes payable 210,000 119,200 Common shares 444,800 344,000 Retained earnings 284,640 243,000 Additional information regarding ICE Drilling's activities during 2020: 1. Loss on sale of equipment is $10,280. 2. Paid $69,080 to reduce a long-term note payable. 3. Equipment costing $99,000, with accumulated depreciation of $57,000, is sold for cash. 4. Equipment costing $214,680 is purchased by paying cash of $54,800 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 $137,960. Additional information regarding ICE Drilling's activities during 2020: 1. Loss on sale of equipment is $10,280. 2. Paid $69,080 to reduce a long-term note payable. 3. Equipment costing $99,000, with accumulated depreciation of $57,000, is sold for cash. 4. Equipment costing $214,680 is purchased by paying cash of $54,800 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 $137,960. 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.) Cash flows from operating activities: Profit ICE DRILLING INC. Statement of Cash Flows For Year Ended December 31, 2020 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 Net cash inflow from operating activities Cash flows from investing activities: Cash flows from financing activities: $ 0 0 0 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: ? 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 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