Why are noncash transactions, such as the exchange of common stock for a building for example, included on a statement of cash flows? How are these noncash transactions disclosed?

Why are noncash transactions, such as the exchange of common stock for a building for example, included on a statement of cash flows? How are these noncash transactions disclosed? complete the following 5 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button. 1.    Critical Thinking Question: Answer the following questions: Why are noncash transactions, such as the exchange of common stock for a building for example, included on a statement of cash flows? How are these noncash transactions disclosed? 2.    Classification of activities Classify each of the following transactions as arising from an operating (O), investing (I), financing (F), or noncash investing/financing (N) activity. a.    ________ Received $80,000 from the sale of land. b.    ________ Received $3,200 from cash sales. c.    ________ Paid a $5,000 dividend. d.    ________ Purchased $8,800 of merchandise for cash. e.    ________ Received $100,000 from the issuance of common stock. f.    ________ Paid $1,200 of interest on a note payable. g.    ________ Acquired a new laser printer by paying $650. h.    ________ Acquired a $400,000 building by signing a $400,000 mortgage note. 3.    Overview of direct and indirect methods Evaluate the comments that follow as being True or False. If the comment is false, briefly explain why. a.    Both the direct and indirect methods will produce the same cash flow from operating activities. b.    Depreciation expense is added back to net income when the indirect method is used. c.    One of the advantages of using the direct method rather than the indirect method is that larger cash flows from financing activities will be reported. d.    The cash paid to suppliers is normally disclosed on the statement of cash flows when the indirect method of statement preparation is employed. e.    The dollar change in the Merchandise Inventory account appears on the statement of cash flows only when the direct method of statement preparation is used. 4.    Equipment transaction and cash flow reporting Dec. 31, 20X4     Dec. 31, 20X3 Property, Plant & Equipment: Land $94,000 $94,000 Equipment     652,000    527,000 Less: Accumulated depreciation     -316,000    -341,000 New equipment purchased during 20x4 totaled $280,000. The 20x4 income statement disclosed equipment depreciation expense of $41,000 and a $9,000 loss on the sale of equipment. a.    Determine the cost and accumulated depreciation of the equipment sold during 20X4. b.    Determine the selling price of the equipment sold. c.    Show how the sale of equipment would appear on a statement of cash flows prepared by using the indirect method. 5.    Cash flow information: Direct and indirect methods The comparative year-end balance sheets of Sign Graphics, Inc., revealed the following activity in the company's current accounts: 20X5     20X4    Increase / Decrease) Current assets Cash     $55,400     $35,200     $20,200 Accounts receivable (net)     83,800    88,000    -4,200 Inventory     243,400    233,800    9,600 Prepaid expenses     25,400    24,200    1,200 Current liabilities Accounts payable     $123,600     $140,600     ($17,000) Taxes payable     43,600    49,200    -5,600 Interest payable     9,000    6,400    2,600 Accrued liabilities     38,800    60,400    -21,600 Note payable     44,000    —     44,000 The accounts payable were for the purchase of merchandise. Prepaid expenses and accrued liabilities relate to the firm's selling and administrative expenses. The company's condensed income statement follows. SIGN GRAPHICS INC. Income Statement for the Year Ended December 31, 20x5 Sales                            $713,800 Less: Cost of goods sold                    323,000 Gross profit                        $390,800 Less: Selling & administrative expenses        $186,000 Depreciation expense                     17,000 Interest expense                        27,000        230,000 Add: gain on sale of land                    $160,800 21,800 Income before taxes                    $182,600 Income taxes                        36,800 Net income                        $145,800 Other data: 1.    Long-term investments were purchased for cash at a cost of $74,600. 2.    Cash proceeds from the sale of land totaled $76,200. 3.    Store equipment of $44,000 was purchased by signing a short-term note payable. Also, a $150,000 telecommunications system was acquired by issuing 3,000 shares of preferred stock. 4.    A long-term note of $49,400 was repaid. 5.    Twenty thousand shares of common stock were issued at $5.19 per share. 6.    The company paid cash dividends amounting to $128,600. Instructions: a.    Prepare the operating activities section of the company's statement of cash flows, assuming use of: 1.    The direct method. 2.    The indirect method. b.    Prepare the investing and financing activities sections of the statement of cash flows. Your name: 1.  Critical thinking question 2.  Classification of activities:  (O, I, F or N) a. b. c. d. e. f. g. h. c.  Overview of direct and indirect methods: (True or False) a. b. c. d. e. 4.  Equipment transaction and cash flow reporting We can figure out the unknows by filling in what we do know, and then calculating what is needed to make debits equal credits. a.    Debits            Credits Beginning equipment            Sales during year Additions during year            Ending balance Total debits            Total credits 0            0 Debits            Credits Removals during year            Beginning depreciation Ending depreciation            Additions during year Total debits            Total credits 0            0 Cost of disposal:                     - Cost of equipment sold = cost of disposal + loss on sale Accumulated depreciation on disposal:                     - b.    Selling price of equipment: Cost of equipment sold                     - Less: Accumulated depreciation on equipment sold                     - Book value                     - Subtract: Loss on sale Cash proceeds from selling equipment                     - c.    Show impact of this sale on the cash flow statement using the indirect method: Cash flows from operating activities Net income                $XXX    (not provided in problem) Add: Loss on sale of equipment Cash flows from investing activities Proceeds from disposal of equipment 5. Cash flow information: Direct and indirect methods a1.    Operating activities section using the direct method: Cash flows from operating activities Cash received from customers Less cash payments for: Purchases of merchandise Selling & administrative expenses Interest Income taxes                 - Net cash provided by operating activities                         - a2.    Operating activities section using the indirect method: Cash flows from operating activities Net income Add (deduct) items to convert net income to a cash basis Depreciation expense Gain on sale of land Decrease in accounts receivable (net) Increase in inventory Increase in prepaid expenses Decrease in accounts payable Decrease in taxes payable Increase in interest payable Decrease in accrued liabilities                 - Net cash provided by operating activities                         - b. Cash flows from investing activities Purchase of long-term investments Proceeds from sale of land Net cash provided by investing act.                         - Cash flows from financing activities Repayment of long-term note Issuance of common stock Dividends paid Net cash used by financing activities                         -