ICE Drilling Inc.s balance sheet information and income statement are as follows:

ICE Drilling Inc.
Income Statement
For Year Ended December 31, 2023
Sales				$	1,112,000
Cost of goods sold					562,000
Gross profit				$	550,000
Operating expenses:
Depreciation expense	$	44,000
Other expenses		306,160
Total operating expenses					350,160
Profit from operations				$	199,840
Loss on sale of equipment					11,880
Profit before taxes				$	187,960
Income taxes					27,560
Profit				$	160,400

ICE Drilling Inc.
Comparative Balance Sheet Information
	December 31
	2023			2022
Cash	$	122,680		$	173,640
Accounts receivable		147,600			113,160
Merchandise inventory		615,200			567,600
Prepaid expenses		12,060			16,000
Equipment		357,680			248,400
Accumulated depreciation		79,560			100,560
Accounts payable		195,820			257,640
Current notes payable		24,400			16,000
Notes payable		210,000			120,800
Common shares		452,800			352,000
Retained earnings		292,640			271,800

Additional information regarding ICE Drillings activities during 2023:

1. Loss on sale of equipment is $11,880.
2. Paid $70,680 to reduce a long-term note payable.
3. Equipment costing $107,000, with accumulated depreciation of $65,000, is sold for cash.
4. Equipment costing $216,280 is purchased by paying cash of $56,400 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 $139,560.

Required: Prepare a statement of cash flows for 2023 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 2023. 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:

check all that apply

• 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:

check all that apply

• increases caused by the purchase of prepaid items, that is, 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, that is, such as the payment of rent or insurance in advance
• increases caused by the use of prepaid expenses

Notes payable:

check all that apply

• 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:

check all that apply

• 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

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