Selected transactions of the Carolina Company are listed below. Classify each transaction as either an operating activity, an investing activity, a financing activity, or a noncash activity. 1. Common stock is sold for cash above par value. 2. Bonds payable are issued for cash at a discount. 3. Interest on a short-term note receivable is collected. 4. Merchandise is sold to customers for cash. 5. Cash is paid to purchase inventory. 6. Equipment is purchased by signing a 3-year, 10% note payable. 7. Cash dividends on common stock are declared and paid. 8. One hundred shares of Amazon.com common stock are purchased for cash. 9. Land is sold for cash at book value. 10. Bonds payable are converted into common stock. Assume the indirect method is used to compute cash flows from operations. For each itemlisted below, indicate the effect on net income in arriving at cash flows from operations by choosing one of the following terms. Added to Net Income Deduct from Net Income 1. Increase in accounts receivable 2. Increase in inventory 3. Decrease in prepaid expenses 4. Decrease in accounts payable 5. Increase in accrued liabilities 6. Increase in income taxes payable 7. Depreciation expense 8. Loss on sale of investment 9. Gain on disposal of equipment 10. Amortization expense