Selected financial information for Frank Corporation is presented below. Selected transactions for the current year are as follows: a. Purchased investment securities for $5,400 cash. b. Borrowed $15,800 on a two-year, 8 percent interest-bearing note. c. During the year, sold machinery for its carrying amount; received $11,600 in cash. d. Purchased machinery for $50,800; paid $9,400 in cash and signed a four-year note payable to the dealer for $41,400. e. Declared and paid a cash dividend of $10,400 on December 31 of the current year. Selected account balances at December 31 of the current and prior years are as follows: Cash December 31 Current Prior Year Year $78,800 $21,400 Accounts receivable Inventory Accounts payable Accrued wages payable Income tax payable 17,400 12, 200 52,400 60,800 7,400 10,800 1,000 1,400 5,400 3,200 One-fourth of the sales and one-third of the purchases were made on credit. FRANK CORPORATION Statement of Earnings For the Current Year Ended December 31 Sales revenue $408,000 Cost of sales 272,000 Gross profit 136,000 Expenses Salaries and wages $51,400 Depreciation 9,600 Rent (no accruals) 6,200 Interest (no accruals) 12,600 Income tax 12,200 Total expenses 92,000 Net earnings $ 44,000 Required: 1. Prepare a statement of cash flows for the year ended December 31 of the current year 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 Current Year Cash flows from operating activities: Net loss Add (deduct) items not affecting cash: Depreciation expense Increase in accounts receivable Increase in inventory Decrease in income tax payable Decrease in wages payable Increase in income tax payable Net cash flows from operating activities Cash flows from investing activities: 9,600 (5,200) (8,400) (3,400) 400 2,200 $ (5,600) (4,800) $ (10,400) Purchase of investments (5,400) Sale of machinery 11,600 Purchase of machinery (9,400) Net cash flows used in investing activities (3,200) Cash flows from financing activities: Borrowing on long-term note Payment of cash dividend 15,800 (10,400) Net cash flows from financing activities Cash, beginning of the year Cash, end of the year 5,400 (8,200) 21,400 $ 13,200 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 eamings ratio 1.41 Capital expenditures ratio (0.15)