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 $25,000in cash was available at the end of 2014. 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, 2014 and 2013
	2014		2013
Assets
Current assets:
Cash	$	25,000	$	45,000
Accounts Receivable		212,000		223,000
Inventory		259,000		202,000
Prepaid expenses		14,000		27,000
Total current assets		510,000		497,000
Long-term investments		120,000		170,000
Plant and equipment		880,000		760,000
Less accumulated depreciation		215,000		193,000
Net plant and equipment		665,000		567,000
Total assets	$	1,295,000	$	1,234,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	184,000	$	241,000
Accrued liabilities		9,000		17,000
Income taxes payable		50,000		44,000
Total current liabilities		243,000		302,000
Bonds Payable		230,000		120,000
Total liabilities		473,000		422,000
Stockholders equity:
Common stock		620,000		650,000
Retained earnings		202,000		162,000
Total stockholders' equity		822,000		812,000
Total liabilities and stockholders' equity	$	1,295,000	$	1,234,000

Rusco Company Income Statement For the Year Ended July 31, 2014
Sales		$	1,000,000
Cost of goods sold			625,000
Gross margin			375,000
Selling and administrative expenses			267,500
Net operating income			107,500
Nonoperating items:
Gain on sale of investments	$25,000
Loss on sale of equipment	(8,000)		17,000
Income before taxes			124,500
Income taxes			37,300
Net income		$	87,200

The following additional information is available for the year 2014.

a.	The company declared and paid a cash dividend.
b.	Equipment was sold during the year for $52,000. The equipment had originally cost $110,000 and had accumulated depreciation of $50,000.
c.	Long-term investments that had cost $50,000 were sold during the year for $75,000.
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 for operating activities for 2014. (Negative amount should be indicated by a minus sign.)

2.	Prepare a statement of cash flows for 2014. (List any deduction in cash and cash outflows as negative amounts.)

3.	Compute free cash flow for 2014. (Negative amount should be indicated by a minus sign.)