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Mary Walker, president of Rusco Company, considers $30,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements,
Mary Walker, president of Rusco Company, considers $30,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $25,000 in cash was available at the end of 2015. 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 July 31, 2015 and 2014 2015 2014 Assets Current assets Cash Accounts receivable Inventory Prepaid expenses $ 25,000 $ 45,000 223,000 202,000 27,000 212,000 259,000 14,000 Total current assets 510,000 497,000 Long-term investments 120,000 170,000 Plant and equipment 880,000 215,000 760,000 193,000 Less accumulated depreciation Net plant and equipment 665,000 567,000 Total assets $1,295,000 $1,234,000 Liabilities and Stockholders' Equity Current liabilities Accounts payable Accrued liabilities Income taxes payable $ 184,000 241,000 17,000 44,000 9,000 50,000 Total current liabilities Bonds payable 243,000 230,000 302,000 0 Total liabilities 473,000 302,000 Stockholders' equity: Common stock Retained earnings 680,000 142,000 650,000 282,000 Total stockholders' equity 822,000 932,000 Total liabilities and stockholders' equity $1,295,000 $1,234,000
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