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 2014. 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. Rusco Company Comparative Balance Sheet July 31, 2014 and 2013 2014 2013 Assets Current assets: Cash $ 8,000 $ 21,000 Accounts Receivable 120,000 80,000 Inventory 140,000 90,000 Prepaid expenses 5,000 9,000 Total current assets 273,000 200,000 Long-term investments 50,000 70,000 Plant and equipment 430,000 300,000 Less accumulated depreciation 60,000 50,000 Net plant and equipment 370,000 250,000 Total assets $ 693,000 $ 520,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 123,000 $ 60,000 Accrued liabilities 8,000 17,000 Income taxes payable 20,000 12,000 Total current liabilities 151,000 89,000 Bonds Payable 70,000 0 Total liabilities 221,000 89,000 Stockholders equity: Common stock 366,000 346,000 Retained earnings 106,000 85,000 Total stockholders' equity 472,000 431,000 Total liabilities and stockholders' equity $ 693,000 $ 520,000 Rusco Company Income Statement For the Year Ended July 31, 2014 Sales $ 500,000 Cost of goods sold 300,000 Gross margin 200,000 Selling and administrative expenses 158,000 Net operating income 42,000 Nonoperating items: Gain on sale of investments $10,000 Loss on sale of equipment (2,000) 8,000 Income before taxes 50,000 Income taxes 20,000 Net income $ 30,000 The following additional information is available for the year 2014. a. The company declared and paid a cash dividend. b. Equipment was sold during the year for $8,000. The equipment had originally cost $20,000 and had accumulated depreciation of $10,000. c. Long-term investments that had 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 for operating activities for 2014. (Negative amount should be indicated by a minus sign.) 2. Prepare a statement of cash flows for 2014. (List any deduction in cash and cash outflows as negative amounts.) 3. Compute free cash flow for 2014. (Negative amount should be indicated by a minus sign.)