Answered step by step
Verified Expert Solution
Question
1 Approved Answer
P11-2 (Algo) Preparing the Statement of Cash Flows (Indirect Method) LO11-1, 11-2, 11-3, 11-5, 11-7 Selected financial information for Frank Corporation is presented below.
P11-2 (Algo) Preparing the Statement of Cash Flows (Indirect Method) LO11-1, 11-2, 11-3, 11-5, 11-7 Selected financial information for Frank Corporation is presented below. Selected transactions for the current year are as follows: a. Purchased investment securities for $5,500 cash. b. Borrowed $16.000 on a two-year, 8 percent interest-bearing note. c. During the year, sold machinery for its carrying amount; received $11,750 in cash. d. Purchased machinery for $51,000; paid $9,500 in cash and signed a four-year note payable to the dealer for $41,500. e. Declared and paid a cash dividend of $10,500 on December 31 of the current year. Selected account balances at December 31 of the current and prior years are as follows: Cash Accounts receivable Inventory December 31 Current Year Prior Year $79,500 $21,500 17,500 12,250 52,500 61,000 Accounts payable. 7,500 11,000 Accrued wages payable. 1,050 1,500 Income tax payable 5,500 3,250 One-fourth of the sales and one-third of the purchases were made on credit. One-fourth of the sales and one-third of the purchases were made on credit. FRANK CORPORATION Statement of Earnings For the Current Year Ended December 31 Sales revenue $410,000 Cost of sales 273,000 Gross profit 137,000 Expenses Salaries and wages $51,500 Depreciation 9,700 Rent (no accruals) 6,300 Interest (no accruals) 12,700 Income tax 12,300 Total expenses 92,500 Net earnings $ 44,500 Required: 1. Prepare a statement of cash flows for the year ended December 31 of the current year by using the indirect method. (Negative answers should be indicated by a minus sign.) FRANK CORPORATION Statement of Cash Flows For the Year Ended December 31 Current Year Cash flows from operating activities Add (deduct) items not affecting cash Net cash flows from operating activities Cash flows from investing activities 0 0 Net cash flows from operating activities Cash flows from investing activities: Net cash flows used in investing activities Cash flows from financing activities Net cash flows from financing activities Cash, beginning of the year Cash, end of the year S 00 0 0 0 $ 0 2. This part of the question is not part of your Connect assignment 3. Compute the quality of earnings ratio and the capital expenditures ratio. (Enter your answers in numbers and not in percentages. Round the final answers to 2 decimal places.) Quality of earnings ratio Capital expenditures ratio
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started