Selected financial information for Frank Corporation is presented below. Selecte

Question

Selected financial information for Frank Corporation is presented below. Selected financial information for Frank Corporation is presented beloww Selected 2017 transactions are as follows a. Purchased investment securities for $5,700 cash. b. Borrowed $16,400 on a two-year, 8 percent interest-bearing note c. During 2017, sold machinery for its carrying amount, received $12,050 in cash d. Purchased machinery for $51,400; paid $9,700 in cash and signed a four-year note payable to the dealer for $41,700 e. Declared and paid a cash dividend of $10,700 on December 31, 2017 Selected account balances at December 31, 2016 and 2017 are as follows December 31 2017 2016 Cash Accounts receivable Inventory Accounts payable Accrued wages pavable Income taxes payable $ 80,900 $21,700 17.700 12.350 52,700 61.400 7,700 11,400 1,700 5,700 3,350 1,150 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 Cost of sales $ 414,000 275,000 Gross profit Expenses 139,000 Salaries and wages Depreciation Rent (no accruals) Interest (no accruals) Income tax $51,700 9,900 6,500 12,900 12,500 Total expenses 93,500 Net earnings $ 45,500 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.)

Explanation / Answer

2.

Working:

FRANK CORPORATION Statement of cash flows for the year ended December 31, 2017 Cash flows from operating activities:    Net Earnings 45500    Add(Deduct) items not affecting cash:     Depreciation expense 9900     Increase in accounts receivable -5350    Decrease in inventory 8700    Accounts Payable -3700    Accrued wages payable -550    Income taxes payable 2350 11350 Cash flow from operating activities 56850 Cash flows from investing activities:     Sales of machinery 12050     Purchase of machinery -9700 Cash flow from investing actvities 2350 Cash flow from financing activities    Purchase of investments -5700    Long term borrowings 16400    Payment of dividends -10700 Cash flow from financing activities 0 Net cash flow 59200 Cash at the beginning 21700 Cash at the end 80900

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