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 $ 1,110,400 Cost of goods sold 554,000 Gross profit $ 556,400 Operating expenses: Depreciation expense $ 36,000 Other expenses 304,560 Total operating expenses 340,560 Profit from operations $ 215,840 Loss on sale of equipment 10,280 Profit before taxes $ 205,560 Income taxes 25,960 Profit $ 179,600 ICE Drilling Inc. Comparative Balance Sheet Information 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 Drillings activities during 2020: Loss on sale of equipment is $10,280. Paid $69,080 to reduce a long-term note payable. Equipment costing $99,000, with accumulated depreciation of $57,000, is sold for cash. Equipment costing $214,680 is purchased by paying cash of $54,800 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. 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.) 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: check all that apply 1 increases caused by the purchase of merchandiseunanswered decreases caused by the purchase of merchandiseunanswered decreases caused by the sale of merchandiseunanswered increases caused by the sale of merchandiseunanswered Prepaid expenses: check all that apply 2 increases caused by the purchase of prepaid items, i.e., such as the payment of rent or insurance in advanceunanswered decreases caused by the use of prepaid expensesunanswered decreases caused by the purchase of prepaid items, i.e., such as the payment of rent or insurance in advanceunanswered increases caused by the use of prepaid expensesunanswered Notes payable: check all that apply 3 increases caused by the issuance of debt (borrowing)unanswered decreases caused by principal paymentsunanswered decreases caused by the issuance of debt (borrowing)unanswered increases caused by principal paymentsunanswered Common shares: check all that apply 4 increases caused by the issuance of shares and/or share dividendsunanswered decreases caused by the repurchase and/or cancellation of sharesunanswered decreases caused by the issuance of shares and/or share dividendsunanswered increases caused by the repurchase and/or cancellation of shares