Mary Walker, president of Rusco Company, considers $$23,000$ to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $$18,000$ 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.

Rusco Company

Comparative Balance Sheet

at July $31$

This Year Last Year

Assets

Current assets:

Cash $ $18,000$ $ $36,600$

Accounts Receivable $224,200213,900$

Inventory $252,700197,800$

Prepaid expenses $9,10018,600$

Total current assets $504,000466,900$

Long$-$term investments $99,000135,000$

Plant and equipment $866,000753,000$

Less accumulated depreciation $211,500190,900$

Net plant and equipment $654,500562,100$

Total assets $ $1,257,500$ $ $1,164,000$

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ $233,300$ $ $175,600$

Accrued liabilities $8,30015,600$

Income taxes payable $44,40040,500$

Total current liabilities $286,000231,700$

Bonds Payable $209,000106,000$

Total liabilities $495,000337,700$

Stockholders$$ equity:

Common stock $627,500615,000$

Retained earnings $135,000211,300$

Total stockholders' equity $762,500826,300$

Total liabilities and stockholders' equity $ $1,257,500$ $ $1,164,000$

Rusco Company

Income Statement

For This Year Ended July $31$

Sales $ $860,000$

Cost of goods sold $537,500$

Gross margin $322,500$

Selling and administrative expenses $230,050$

Net operating income $92,450$

Nonoperating items:

Gain on sale of investments $ $21,500$

Loss on sale of equipment $(6,600)14,900$

Income before taxes $107,350$

Income taxes $32,190$

Net income $ $75,160$

The following additional information is available for this year.

The company declared and paid a cash dividend.

Equipment was sold during the year for $$46,400.$ The equipment originally cost $$96,000$ and had accumulated depreciation of $$43,000.$

Long$-$term investments that cost $$36,000$ were sold during the year for $$57,500.$

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.