Selected financial information for Frank Corporation is presented below. Selected 2017 transactions are as follows: a. Purchased investment securities for $6,300 cash. b. Borrowed 517,600 on a two-year, 8 percent interest-bearing note. c. During 2017, sold machinery for its carrying amount; received $12,950 in cash. d. Purchased machinery for $52,600; paid $10,300 in cash and signed a four-year note payable to the dealer for $42,300. e. Declared and paid a cash dividend of $11,300 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 $ 85,100 $ 22,300 18,300 12,650 53,300 62,600 8,300 12,600 1,450 2,300 6,300 3,650 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 $ 426,000 Cost of sales 281,000 145,000 Gross profit Expenses Salaries and wages Depreciation Rent (no accruals) Interest (no accruals) Income tax $ 52,300 10,500 7,100 13,500 13,100 96,500 Total expenses Net earnings $ 48,500 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: Net earnings Add (deduct) items not affecting cash: Depreciation expense Increase in accounts receivable Decrease in inventory Decrease in accounts payable Decrease in wages payable Increase in income tax payable Net cash flow from operating activities Cash flows from investing activities: Sale of machinery Purchase of machinery Purchase of investments 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 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