Mary Walker, president of Rusco Company, considers $28,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $23,000 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.
usco Company Comparative Balance Sheet at July 31 This Year Last Year Assets Current assets: S42,600 228,480 200,800 12,60024,688 Cash $ 23,800 231,200 257,200 Accounts Receivable 0.83 points Inventory Prepaid expenses Total current assets Long-term investments Plant and equipment 524,8488,488 758,000 565,60e 168,08 876,000 214,000 662.800 $1,380,000 Less accumulated depreciation Net plant and equipment Total assets Liabilities and Stockholders' Equity 192,48e ww eBook $1,214,000 References Current liabilities: 238,800 176,600 16,680 43,080 236,200 224,00 116,989 520,803 3321Ee Accounts payable Accrued liabilities 8,800 48.408 Income taxes payable Total current liabilities Bonds Payable Total liabilities Stockholders equity: 296,800 352,28e Common stock Retained earnings 665,800 115,808 640,000 221,88e 280e Total stockholders' equity Total liabilities and stockholders equity 780,8861,888 $1,214,000 $1,300,800 Income Statement For This Year Ended July 31 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: $960,000 600,0ee 360,000 256,800 103,200 Gain on sale of investments 524,000 0.83 points 7,699) 16,400 119,680 Loss on sale of equipment Income before taxes Income taxes Net income 35,848 Skipped $ 83,760 eBook 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 $50,400. The equipment originally cost $106,000 and had accumulated depreciation of $48,000 c. Long-term investments that cost $46,000 were sold during the year for $70,000. 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 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 Required 1Required 2 Required 3 8 Using the indirect method, compute the net cash provided by/used in operating activities for this year. (List any deduction in cash and cash outflows as negative amounts.) Rusco Company Statement of Cash Flows-Indirect Method (partial) 0.83 points Skipped eBook References Required 1 Required 2 Prepare a statement of cash flows for this year. (List any deduction in cash and cash outflows as negative amounts.) 8 Rusco Company Statement of Cash Flows For This Year Ended July 31 Operating activities: 0.83 points Investing activities: Skipped eBook References Financing activities Beginning cash and cash equivalents Ending cash and cash equivalents The following additional information is available for this year 8 a. The company declared and paid a cash dividend. b. Equipment was sold during the year for $50,400. The equipment originally cost $106,000 and had accumulated depreciation of $48,000. c. Long-term investments that cost $46,000 were sold during the year for $70,000. d. The company did not retire any bonds payable or repurchase any of its common stock. 0.83 points Skipped 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. eBook References Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute free cash flow for this year. (Negative amount should be indicated by a minus sign.) Free cash flow Required 2 Required 3
