Question Mary Walker, president of Rusco Company, considers $14,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $8,000 in cash was available at the end of this year. Since the company reported a large net income for the year, and also issued both bonds and common stock, the sharp decline in cash is puzzling to Ms. Walker, This Year Last Year Rusco Company Comparative Balance sheet at July 31 Assets Current AS1 Cash Accounts receivable Inventory Prepaid expenses Total current asset Long-term investments plant and equipment Leon accumulated depreciation Not plant and equipment Totalanta Liabilities and stockholders' Equity Current liabilities Accounts payable hccrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Stockholders' equity Common stock Retained earnings Total stockholders' equity at Title $3,000 120.000 140,000 5.000 273.000 150,000 430.000 60,000 370.000 5693,900 $ 21,000 10.000 90,000 9.000 200,000 70.000 300,000 50,000 250.000 3520,009 9123,000 8.000 20.000 151.000 70.000 221 000 $ 60,000 17,000 32,000 89,000 19.000 366,000 106,000 422,000 Connn 346.000 85,00 1.000 559 non Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 366,000 106,000 472,000 $693,000 346,000 85,000 431,000 $520,000 Rianco Company Income Statement Tor This Year Ended July 31 Sales Cont of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items Gain on sale of investments $10,000 Loes on sale of equipment 12.000) Income before taxes Income taxes Net income $500,000 300,000 200,000 158,000 42,000 8.000 50,000 20,000 $ 30,000 The following additional information is available for this year. a. The company declared and paid a cash dividend. b. Equipment was sold during the year for $8,000, The equipment originally cost $20,000 and had accumulated depreciation of $10,000 c. Long-term investments that cost $20,000 were sold during the year for $30,000 d. The company did not retire any bonds payable or repurchase any of its common stock Required: 1. Using the Indirect method, compute the net cash provided by used in operating activities for this year. 2. Prepare a statement of cash flows for this year. 3. Compute free cash flow for this year, Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Using the Indirect method, compute the net cash provided by used in operating activities for this year. (List any deduction in cash outflows as negative amounts.) Rusco Company Statement of Cash Flows-Indirect Method (partialy Required 1 Required 2 Required 3 Prepare a statement of cash flows for this year. (List any deduction in cash and cash outflows as negative amounts.) Rusco Company Statement of Cash Flows For This Year Ended July 31 Operating activities: Investing activities: + Financing activities: Beginning cash and cash equivalents Ending cash and cash equivalents Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute free cash flow for this year. (Negative amount should be indicated by a minus sign.) Free cash flow < Required 2 Required

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