P5-2 Preparing the Statement of Cash Flows (Indirect Method) LO5-1, 5-2,5-3,5-5,5-7 Selected financial information for Frank Corporation is presented below. Selected 2020 transactions are as follows: a. Purchased investment securities for $6,600 cash. b. Borrowed $18,200 on a two-year, 8 percent interest-bearing note. c. During 2020, sold machinery for its carrying amount; received $13,400 in cash. d. Purchased machinery for $53,200; paid $10,600 in cash and signed a four-year note payable to the dealer for $42,600. e. Declared and paid a cash dividend of $11,600 on December 31, 2020. Selected account balances at December 31, 2019 and 2020 are as follows: Cash Accounts receivable Inventory Accounts payable Accrued wages payable Income taxes payable December 31 2020 2019 $ 87,200 $ 22,600 18,600 12,800 53,600 63,200 8,600 13, 200 1,600 2,600 6,600 3,800 One-fourth of the sales and one-third of the purchases were made on credit. FRANK CORPORATION Statement of Earnings For the Year Ended December 31, 2020 Sales revenue $ 432,000 Cost of sales 284,000 Gross profit 148,000 Expenses Salaries and wages $52,600 Depreciation 10,800 Rent (no accruals) 7,400 Interest (no accruals) 13,800 Income tax 13,400 Total expenses 98,000 Net earnings $ 50,000 Required: 1. Prepare a statement of cash flows for the year ended December 31, 2020 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, 2020 Cash flows from operating activities: Add (deduct) items not affecting cash: $ 0 Net cash flow from operating activities Cash flows from investing activities: 0 Net cash flow from investing activities Cash flows from financing activities: Net cash inflow from financing activities 0 Cash, beginning of 2020 Cash, end of 2020 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