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 2017 transactions are as follows: a. Purchased investment securities for $6,400 cash. b. Borrowed $17,800 on a two-year, 8 percent interest-bearing note. c. During 2017, sold machinery for its carrying amount; received $13,100 in cash. d. Purchased machinery for $52,800; paid $10,400 in cash and signed a four-year note payable to the dealer for $42,400. e. Declared and paid a cash dividend of $11,400 on December 31, 2017 Selected account balances at December 31, 2016 and 2017 are as follows: December 31 Cash Accounts receivable Inventory Accounts payable Accrued wages payable Income taxes payable 2017 2016 $ 85,800 $ 22,400 18,400 12,700 53,400 62,800 8,400 12,800 1,500 2,400 6,400 3,700 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, 2017 Sales revenue $ 428,000 Cost of sales 282,000 146,000 Gross profit Expenses Salaries and wages Depreciation Rent (no accruals) Interest (no accruals) Income tax $ 52,400 10,600 7,200 13,600 13,200 Total expenses 97,000 Net earnings $ 49,000 Required: 1. Prepare a statement of cash flows for the year ended December 31, 2017 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, 2017 Cash flows from operating activities: Add (deduct) items not affecting cash: Net cash flow from operating activities Cash flows from investing activities: Net cash flow from investing activities Cash flows from financing activities: Net cash inflow from financing activities Cash, beginning of 2017 Cash, end of 2017 2. 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 cality of eaminge ratione