Mary Walker, president of Rusco Company, considers $35,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $30,000 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. Last Year Rusco Company Comparative Balance Sheet at July 31 This Year Assets Current assets: Cash $ 30,000 Accounts Receivable 241,000 Inventory 263,500 Prepaid expenses 17,500 Total current assets 552,000 Long-term investments 135,000 Plant and equipment 890,000 Less accumulated depreciation 217,500 Net plant and equipment 672,500 Total assets $1,359,500 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 246,500 Accrued liabilities 9,500 Income taxes payable 54,000 Total current liabilities 310,000 Bonds Payable 245,000 Total liabilities 555,000 $ 51,000 229,500 205,000 33,000 518,500 195,000 765,000 194,500 570,500 $1,284,000 $ 178,000 18,000 46,500 242,500 130,000 372,500 Stockholders' equity: Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 717,500 87,000 804,500 $1,359,500 675,000 236,500 911,500 $1,284,000 Rusco Company Income Statement For This Year Ended July 31 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of investments $27,500 Loss on sale of equipment (9,000) Income before taxes Income taxes Net income $1,100,000 687,500 412,500 294,250 118,250 18,500 136,750 40,950 95,800 $ 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 $56,000. The equipment originally cost $120,000 and had accumulated depreciation of $55,000. c. Long-term investments that cost $60,000 were sold during the year for $87,500. 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 1 Required 2 Required 3 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 $ 0 Rusco Company Statement of Cash Flows For This Year Ended July 31 Operating activities: Investing activities: 0 Financing activities: 0 0 Beginning cash and cash equivalents Ending cash and cash equivalents $ 0 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