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

ICE Drilling Inc.
Income Statement
For Year Ended December 31, 2017
Sales				$	1,109,600
Cost of goods sold					550,000
Gross profit				$	559,600
Operating expenses:
Depreciation expense	$	32,000
Other expenses		303,760
Total operating expenses					335,760
Profit from operations					223,840
Loss on sale of equipment					9,480
Profit before taxes				$	214,360
Income taxes					25,160
Profit				$	189,200

ICE Drilling Inc.
Comparative Balance Sheet Information
	December 31
	2017			2016
Cash	$	101,680		$	161,640
Accounts receivable		135,600			101,160
Merchandise inventory		603,200			555,600
Prepaid expenses		11,940			14,000
Equipment		355,280			236,400
Accumulated depreciation		67,560			88,560
Accounts payable		196,300			289,240
Current notes payable		12,400			4,000
Notes payable		210,000			118,400
Common shares		440,800			340,000
Retained earnings		280,640			228,600

Additional information regarding ICE Drillings activities during 2017: 1. Loss on sale of equipment is $9,480. 2. Paid $68,280 to reduce a long-term note payable. 3. Equipment costing $95,000, with accumulated depreciation of $53,000, is sold for cash. 4. Equipment costing $213,880 is purchased by paying cash of $54,000 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 $137,160.

Required: Prepare a statement of cash flows for 2017 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 2017. 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

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