Selected 2020 transactions are as follows: a. Purchased investment securities for $5,800 cash. b. Borrowed $16,600 on a two-year, 8 percent interest-bearing note. c. During 2020, sold machinery for its carrying amount; received $12,200 in cash. d. Purchased machinery for $51,600; paid $9,800 in cash and signed a four-year note payable to the dealer for $41,800. e. Declared and paid a cash dividend of $10,800 on December 31, 2020. Selected account balances at December 31, 2019 and 2020 are as follows: December 31 Cash Accounts receivable. Inventory Accounts payable 2020 $81,600 2019 $21,800 17,800 12,400 52,800 61,600 7,800 11,600 Accrued wages payable 1,200 1,800 Income taxes payable 5,800 3,400 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 Year Ended December 31, 2020 Sales revenue $416,000 Cost of sales 276,000 Gross profit 140,000 Expenses Salaries and wages $51,800 Depreciation 10,000 Rent (no accruals) 6,600 Interest (no accruals) 13,000 Income tax Total expenses Net earnings 12,600 94,000 $ 46,000 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: Net earnings Add (deduct) items not affecting cash: Depreciation expense Increase in income tax payable Increase in accounts receivable Decrease in inventory Decrease in accounts payable Net cash flow from operating activities Cash flows from investing activities: Sale of machinery Purchase of investments Purchase of machinery Net cash flow from investing activities Cash flows from financing activities: Borrowing on long-term note Payment of cash dividend Net cash inflow from financing activities Cash, beginning of 2020 Cash, end of 2020 $ 46,000 10,000 12,600 12,200 $ 68,600 7 5,000 71,000 $ 71,000 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