P5-2 Preparing the Statement of Cash Flows (Indirect Method) LO5-1, 5-2,5-3, 5-5,5-7 Selected financial information for Frank Corporation is presented below. Selected 2020 transactions are as follows: a. Purchased investment securities for $6,200 cash. b. Borrowed $17,400 on a two-year, 8 percent interest-bearing note. c. During 2020, sold machinery for its carrying amount; received $12,800 in cash. d. Purchased machinery for $52,400; paid $10,200 in cash and signed a four-year note payable to the dealer for $42,200. e. Declared and paid a cash dividend of $11,200 on December 31, 2020. Selected account balances at December 31, 2019 and 2020 are as follows: Cash Accounts receivable Inventory Accounts payable Accrued wages payable Income taxes payable December 31 2020 2019 $84,400 $22,200 18,200 12,600 53,200 62,400 8,200 12,400 1,400 2,200 6,200 3,600 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 $424,000 Cost of sales 280,000 Gross profit 144,000 Expenses Salaries and wages $52,200 Depreciation 10,400 Rent (no accruals) 7,000 Interest (no accruals) 13,400 Income tax 13,000 Total expenses 96,000 Net earnings $ 48,000 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: 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: 0 Net cash flow from investing activities Cash flows from financing activities: Net cash inflow from financing activities 0 0 Cash, beginning of 2020 Cash, end of 2020 0