Exercise 16-7 Preparing the statement of cash flows (indirect method) LO2, 5, 6 Western Environmental Inc. Comparative Balance Sheet Information June 30 2020 2019 Cash $ 89,960 $ 32,000 Accounts receivable (net) 91,898 73,480 Inventory 89, 110 116,11 Prepaid expenses 6,430 6,190 Equipment 151, 880 139, eee Accumulated depreciation 32,600 7,080 Accounts payable 38,200 37,480 Wages payable 7,480 18,200 Income taxes payable 2,830 4,270 Notes payable (long-term) 43,899 79,080 Common shares 271,880 211,800 Retained earnings 31,470 9,830 $781,880 477,880 $393,280 Western Environmental Inc. Income Statement For Year Ended June 30, 2020 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 70,270 Other expenses 80,35e Total operating expenses Profit from operations Gain on sale of equipment Profit before taxes Income taxes Profit 158,620 $152,580 1,480 $153,980 52,580 $181,480 Required: Use the Western Environmental Inc. information given below to prepare a statement of cash flows for the year ended June 30, 2020, using the Indirect method. (Llst any deduction in cash and cash outflows as negative amounts.) a. A note is retired at carrying value. b. The only changes affecting retained earnings during 2020 are profit and cash dividends paid. c. New equipment is acquired during 2020 for $67,270. d. The profit on sale of equipment costing $55,270 during 2020 is $1,400. e. Prepaid expenses and wages expense affect other expenses on the income statement. 1. All sales and purchases of merchandise were on credit. WESTERN ENVIRONMENTAL INC. Statement of Cash Flows For Year Ended June 30, 2020 Cash flows from operating activities: Adjustments to reconcile profit to net cash provided by operating activities: $ 0 Cash flows from investing activities: 0 Cash flows from financing activities: 0 $ 0