P5-5 (Appendix 5A) Preparing the Statement of Cash Flows with Sale of Equipment (Indirect Method) LO5-2,5-3,5-5, 5-S1 The following information has been reported by Laporte Inc. on its statements of financial position at December 31, 2016 and 2017, and on its statement of earnings for the year ended December 31, 2017. Amounts are in millions of dollars: $ 135 Statements of Financial Position 2017 Cash Accounts receivable 76 Merchandise inventory 60 Long-term investments Property, plant, and equipment 228 Accumulated depreciation (30) 2016 $ 85 58 52 188 (62) $387 Total assets $ 469 $ 58 72 8 Accounts payable Income taxes payable Long-term borrowings Contributed capital Retained earnings 68 138 197 69 185 54 Total liabilities and shareholders' equity $ 469 $387 Statement of Earnings Sales Cost of sales $ 225 (135) Gross profit Depreciation expense Other operating expenses (10) (56) Earnings from operations Gain on sale of investments Loss on sale of equipment Earnings before income tax Income tax expense Net earnings $ 19 Additional information is as follows: a. Old equipment was sold for cash during 2017. It had an original cost of $60 and an accumulated depreciation of $42. b. A new building was acquired during the year in exchange for a long-term note for $70, payable in five years. In addition, new equipment was purchased for cash. Required: 1. Prepare the operating activities section of the statement of cash flows for Laporte Inc. for the year ended December 31, 2017 by using the indirect method. (Negative answers should be indicated by a minus sign. Enter your answers in millions.) Required: 1. Prepare the operating activities section of the statement of cash flows for Laporte Inc. for the year ended December 31, 2017 by using the indirect method. (Negative answers should be indicated by a minus sign. Enter your answers in millions.) LAPORTE INC. Statement of Cash Flows (Partial) For the Year Ended December 31, 2017 Cash flows from operating activities: Add (deduct) items not affecting cash: Net cash used for operating activities S 2. Prepare the investing activities section of the statement of cash flows for Laporte Inc. for the year ended December 31, 2017. (Negative answers should be indicated by a minus sign. Enter your answers in millions.) LAPORTE INC. Statement of Cash Flows (Partial) For the Year Ended December 31, 2017 Cash flows from investing activities: 3. Compute each of the following for the year 2017: (a) quality of earnings ratio, (b) capital expenditures ratio, and (c) free cash flow. (Negative answers should be indicated by a minus sign. Round "Ratio" answers to 2 decimal places.) (a) Quality of earnings ratio (b) Capital expenditures ratio (c) Free cash flow 4. Based on your answers to (1.) and (2.) above, determine the net cash flow from financing activities. (Hint: This can be done without preparing the financing activities section of the statement.) (Enter your answer in millions.) Cash flow from financing activities 5. The president of Laporte Inc., Tanya Turcotte, was provided with a copy of the operating activities section of the statement of cash flows that you prepared in (1.), and made the following comment: "This report is supposed to show operating cash inflows and outflows during the year, but I don't see how much cash Laporte Inc. received from customers and how much it paid to trade suppliers and for income taxes. Please ask whoever prepared this statement to provide me with these numbers." Based on Tanya's comment, compute the following amounts for 2017: (Enter your answers in millions.) a. Cash collected from customers b. Cash paid to trade suppliers c. Cash paid for income taxes