An analysis of Martin Corporation's operational asset accounts provided the following information:

a. Acquired a large machine that cost \(\$ 26,000\), paying for it by signing a \(\$ 15,000,12\) percent interest-bearing note due at the end of two years, and issuing 500 common shares with a market value of \(\$ 22\) per share.

b. Acquired a small machine that cost \(\$ 8,700\). Full payment was made by transferring a tract of land that had a carrying amount of \(\$ 8,700\).

Required:

1. Show how this information should be reported on the statement of cash flows.

2. What would be the effect of these transactions on the capital acquisitions ratio? How might these transactions distort interpretation of the ratio?