Mary Walker, president of Rusco Company, considers $26,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $ 21,000 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 WELCOME TO This Year Last Year Rusco Company Determining the Net Cash Flows from Operating Activities Direct Method $ 21,860 287,28 255,400 11,200 494,20 188,eee 872,000 213, eee 659,600 $1,261,289 Adjustments to a cash basis: Rusco Company Statement of Cash Flows For This Year Ended July 31 Operating activities: Cash received from oustomers Less cash disbursements for: $ 40,200 217,20 199,600 22,28 479,380 150,000 756,eee 191, de 564,280 $1,194,000 Adjustments to a cash basis: Assets Current assets: Cash and cash equivalents Accounts receivable Inventory Prepaid expenses Total current assets Long-term investments Plant and equipment Less accumulated depreciation Net plant and equipment Total assets Liabilities and stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities stockholders' equity! Comon stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Total cash disbursements $ 189,480 Selling and administrative expenses Adjustments to a cash basis: Investing activities: 8,68 46,200 235,200 218,eee 453,00 $ 236,600 16,280 42,eee 294,220 112,6ee 486, 888 650,400 157,680 288,eee $1,261,300 638,ees 157,280 787,200 $1,194,eee Income taxes Adjustments to a cash basis: Financing activities: $928,eee RUSCO Company Income statement For This Year Ended July 31 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating siten: Gain on sale of investments Loss on sale of equipment Income before taxes Income taxes Net income 575, eee 345,600 246, 189 98,9ce Beginning cash and cash equivalents Ending cash and cash equivalents $ 23,6ee (7,220) 15,20 114,700 34,382 $ 39,329 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 $48,800. The equipment originally cost $102,000 and had accumulated depreciation of $46.000. c. Long term Investments that cost $42.000 were sold during the year for $65,000. d. The company did not retire any bonds payable or repurchase any of its common stock