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Selected financial information for Frank Corporation is presented below. Selected 2017 transactions are as follows: a. Purchased investment securities for $6,700 cash. b. Borrowed $18,400 on a two-year, 8 percent interest-bearing note. c. During 2017, sold machinery for its carrying amount; received $13,550 in cash. d. Purchased machinery for $53,400; paid $10,700 in cash and signed a four-year note payable to the dealer for $42,700. e. Declared and paid a cash dividend of $11,700 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 $87,900 $22,700 18,700 12,850 53,700 63,400 8,700 13,400 1,650 2,700 6,700 3,850 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 $434,000 Cost of sales 285,000 149,000 Gross profit Expenses Salaries and wages Depreciation Rent (no accruals) Interest (no accruals) Income tax $52,700 10,900 7,500 13,900 13,500 Total expenses 98,500 Net earnings $ 50,500 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: $ 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 Net cash inflow from financing activities 0 0 Cash, beginning of 2017 Cash, end of 2017 $ 0 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 FRANK CORPORATION Statement of Cash Flows For the Year Ended December 31, 2017 Cash flows from operating activities: Widoduetitame not affectina cock Net earnings Net loss $ 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 FRANK CORPORATION Statement of Cash Flows For the Year Ended December 31, 2017 Cash flows from operating activities: Add (deduct) items not affecting cash: Borrowing on long-term note Decrease in accounts payable Decrease in inventory Decrease in wages payable $ 0 Cash flows from investing activities: 0 Net cash flow from investing activities Cash flows from financing activities: Net cash inflow from financing activities 0 FRANK CORPORATION Statement of Cash Flows For the Year Ended December 31, 2017 Cash flows from operating activities: Add (deduct) items not affecting cash: Decrease in wages payable Depreciation expense Increase in accounts receivable Increase in income tax payable Payment of cash dividend $ 0 Cash flows from investing activities: 0 Net cash flow from investing activities Cash flows from financing activities: Net cash inflow from financing activities 0 FRANK CORPORATION Statement of Cash Flows For the Year Ended December 31, 2017 Cash flows from operating activities: Add (deduct) items not affecting cash: Increase in income tax payable Payment of cash dividend Purchase of investments Purchase of machinery Sale of machinery $ 0 Cash flows from investing activities: 0 Net cash flow from investing activities Cash flows from financing activities: Net cash inflow from financing activities 0 $ 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 0 besinning of 2017 $ 0 Net decrease in cash during 2017 Net increase in cash during 2017