Mary Walker, president of Rusco Company, considers $$29,000$ to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $$24,000$ 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 $ $24,000$ $ $43,800$

Accounts Receivable $232,600221,700$

Inventory $258,100201,400$

Prepaid expenses $13,30025,800$

Total current assets $528,000492,700$

Long$-$term investments $117,000165,000$

Plant and equipment $878,000759,000$

Less accumulated depreciation $214,500192,700$

Net plant and equipment $663,500566,300$

Total assets $ $1,308,500$ $ $1,224,000$

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ $239,900$ $ $176,800$

Accrued liabilities $8,90016,800$

Income taxes payable $49,20043,500$

Total current liabilities $298,000237,100$

Bonds Payable $227,000118,000$

Total liabilities $525,000355,100$

Stockholders$$ equity:

Common stock $672,500645,000$

Retained earnings $111,000223,900$

Total stockholders' equity $783,500868,900$

Total liabilities and stockholders' equity $ $1,308,500$ $ $1,224,000$

Rusco Company

Income Statement

For This Year Ended July $31$

Sales $ $980,000$

Cost of goods sold $612,500$

Gross margin $367,500$

Selling and administrative expenses $262,150$

Net operating income $105,350$

Nonoperating items:

Gain on sale of investments $ $24,500$

Loss on sale of equipment $(7,800)16,700$

Income before taxes $122,050$

Income taxes $36,570$

Net income $ $85,480$

The following additional information is available for this year.

The company declared and paid a cash dividend.

Equipment was sold during the year for $$51,200.$ The equipment originally cost $$108,000$ and had accumulated depreciation of $$49,000.$

Long$-$term investments that cost $$48,000$ were sold during the year for $$72,500.$

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.