014-2. LO14-3 Mary Walker, president of Rusca Company, csers $14000 to be the minimum cash bange for operating purposes. As can be seen from the following statements, only $8,000 in cash was avail able at the end of this year. Since the company reported a large net income for the year, and also issued both hands and common stock, the sharp decline in cash is puzzling to Ms. Walker Rusce Company Comparative Balance Sheeta July 31 This Year Last Year Assets Current assets Cash and cash equivalents Accounts receivable Inventory Prepaid expenses Total current assets Long-term investments Pant and equiment Less accumulated depreciation Net blant and equipment $ 8.000 120.000 140 000 5.000 273.000 50.000 430.000 60.000 370,000 $693.000 $ 21.000 80 000 90,000 9.000 200.000 20 000 300.000 250.000 $520000 Liabilities and Stockholders Equity Current liabilities Accounts payable Accued abilities Income taxes payable Totalcument liabilities Bonds payable Totales Stockholders' equity Common stock... Retained earnings Total stockholders equity Total abilities and stockholders' equity $123,000 8.000 20.000 151 000 70,000 221.000 $60,000 17.000 12.000 99.000 99 000 366.000 106,000 472.000 $693.000 345 000 85.000 431.000 $520000 Rusce Company Income Statement For This Year Ended July 31 $ 500.000 300.000 200,000 158,000 42,000 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items Gain on sale of investments Loss on sale of equipment Income before taxes Income taxes Net Income $10.000 2000 8.000 50.000 20.000 $ 30,000 Chapter 14 The bllowing additional information is available for this year The company declared and paid a cash divend Equipment was sold during the year for $8.000. The equipment originally cost $20.000 and had accumulated depreciation of $10.000 Long-term investments that cos $20.000 were soll during the $30000 d The company did not retire any bonds payable or repurchase any of its common stock Required: 1. Using the indirect method, compute the cash provided by petaling activities for this year. 2 Using the data from (1) above, and other data from the problem as needed, prepare a statement of callows for this year 3 Compute free cash flow for this year 4 Explain the major reasons for the decline in the company'cash balance