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 This Year Last Year Assets Current assets: Cash $ 21,000 $ 40,200 Accounts Receivable 228,400 217,800 Inventory 255,400 199,600 Prepaid expenses 11,200 22,200 Total current assets 516,000 479,800 Long-term investments 108,000 150,000 Plant and equipment 872,000 756,000 Less accumulated depreciation 213,000 191,800 Net plant and equipment 659,000 564,200 Total assets $ 1,283,000 $ 1,194,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 292,800 $ 236,600 Accrued liabilities 8,600 16,200 Income taxes payable 46,800 42,000 Total current liabilities 348,200 294,800 Bonds Payable 218,000 112,000 Total liabilities 566,200 406,800 Stockholders equity: Common stock 650,000 630,000 Retained earnings 66,800 157,200 Total stockholders' equity 716,800 787,200 Total liabilities and stockholders' equity $ 1,283,000 $ 1,194,000 Rusco Company Income Statement For This Year Ended July 31 Sales $ 920,000 Cost of goods sold 575,000 Gross margin 345,000 Selling and administrative expenses 246,100 Net operating income 98,900 Nonoperating items: Gain on sale of investments $ 23,000 Loss on sale of equipment (7,200 ) 15,800 Income before taxes 114,700 Income taxes 34,380 Net income $ 80,320 The following additional information is available for this year. The company declared and paid a cash dividend. Equipment was sold during the year for $48,800. The equipment originally cost $102,000 and had accumulated depreciation of $46,000. Long-term investments that cost $42,000 were sold during the year for $65,000. 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.