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

ICE Drilling Inc.Income StatementFor Year Ended December 31, 2023Sales $1,113,400 Cost of goods sold 569,000 Gross profit $544,400 Operating expenses: Depreciation expense$51,000 Other expenses 307,560 Total operating expenses 358,560 Profit from operations $185,840 Loss on sale of equipment 13,280 Profit before taxes $172,560 Income taxes 28,960 Profit $143,600

ICE Drilling Inc.Comparative Balance Sheet Information December 31 20232022Cash$129,680 $180,640 Accounts receivable 154,600 120,160 Merchandise inventory 622,200 574,600 Prepaid expenses 12,130 23,000 Equipment 359,080 255,400 Accumulated depreciation 86,560 107,560 Accounts payable 190,290 245,040 Current notes payable 31,400 23,000 Notes payable 210,000 122,200 Common shares 459,800 359,000 Retained earnings 299,640 297,000

Additional information regarding ICE Drillings activities during 2023:

1. Loss on sale of equipment is $13,280.
2. Paid $72,080 to reduce a long-term note payable.
3. Equipment costing $114,000, with accumulated depreciation of $72,000, is sold for cash.
4. Equipment costing $217,680 is purchased by paying cash of $57,800 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 $140,960.

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 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, that is, 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, that is, 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 dividends