Mary Walker, president of Rusco Company, considers $31,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $26,000 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	$	26,000		$	46,200
Accounts Receivable		235,400			224,300
Inventory		259,900			202,600
Prepaid expenses		14,700			28,200
Total current assets		536,000			501,300
Long-term investments		123,000			175,000
Plant and equipment		882,000			761,000
Less accumulated depreciation		215,500			193,300
Net plant and equipment		666,500			567,700
Total assets	$	1,325,500		$	1,244,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	242,100		$	177,200
Accrued liabilities		9,100			17,200
Income taxes payable		50,800			44,500
Total current liabilities		302,000			238,900
Bonds Payable		233,000			122,000
Total liabilities		535,000			360,900
Stockholders equity:
Common stock		687,500			655,000
Retained earnings		103,000			228,100
Total stockholders' equity		790,500			883,100
Total liabilities and stockholders' equity	$	1,325,500		$	1,244,000

Rusco Company Income Statement For This Year Ended July 31
Sales					$	1,020,000
Cost of goods sold						637,500
Gross margin						382,500
Selling and administrative expenses						272,850
Net operating income						109,650
Nonoperating items:
Gain on sale of investments	$	25,500
Loss on sale of equipment		(8,200	)			17,300
Income before taxes						126,950
Income taxes						38,030
Net income					$	88,920

The following additional information is available for this year.

1. The company declared and paid a cash dividend.
2. Equipment was sold during the year for $52,800. The equipment originally cost $112,000 and had accumulated depreciation of $51,000.
3. Long-term investments that cost $52,000 were sold during the year for $77,500.
4. 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.