Statements 2. Companies that use disclose in the notes a reconciliation of net! additional information does this disclosure requirement provide to Explain 55.5-$1 P5-5 L05-S1 Cash Appendix 5A) Preparing the Statement of Cash Flows with Sale of Equipment (Indirect Method) (AP5-5) at December 31, 2019 and 2020 and on its statement of earnings for the year ended December 3). The following information has been reported by laporte Inc. on its statements of financial position 2020. Amounts are in millions of dollars: Statements of Financial Position 2019 2020 $ 90 $ 68 24 34 Accounts receivable 28 32 Merchandise inventory 18 Long-term investments 196 154 Property, plant, and equipment 196) (78) Accumulated depreciation $270 $200 Total assets $ 24 $ 38 Accounts payable Income taxes payable 3 4 Long term borrowings 80 20 Contributed capital 115 100 Retained earnings 48 38 Total liabilities and shareholders' equity $270 $200 LO5-S2 N LOS Statement of Earnings Sales Cost of sales Gross profit Depreciation expense Other operating expenses Earnings from operations Gain on sale of investments Loss on sale of equipment Earnings before income tax Income tax expensa Net earnings $140 (84) 56 (10) (34) 12 6 (2) 16 4 $ 12 LOS-S excel Additional information is as follows: a. Old equipment was sold for cash during 2020. It had an original cost of $40 and an accumulated depreciation of $28. . A new building was acquired during the year in exchange for a long-term note for $50, payable in five years. In addition, new equipment was purchased for cash. Required: 1. Prepare the operating activities section of the statement of cash flows for Laporte Inc. for the year ended December 31, 2020, Use the indirect method to report the cash flow from operations. 2. Prepare the investing activities section of the statement of cash flows for Laporte Inc. for the year ended December 31, 2020. 3. Compute and explain each of the following for the year 2020: (a) quality of earnings ratio, (b) capital expenditures ratio, and (c) free cash flow, 4. Based on your answers to (1) and (2) above, determine the net cash flow from financing activities (Hint: This can be done without preparing the financing activities section of the statement.) 5. The president of Laporte Inc., Tanya Turcotte, was provided with a copy of the operating activities section of the statement of cash flows that you prepared in (1), and made the following commer "This report is supposed to show operating cash inflows and outflows during the year, but I dont