Mary Walker, president of Rusco Company, considers $36,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $31,000 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 $ 31,000 $ 52,200 Accounts Receivable 242,400 230,800 Inventory 264,400 205,600 Prepaid expenses 18,200 34,200 Total current assets 556,000 522,800 Long-term investments 138,000 200,000 Plant and equipment 892,000 766,000 Less accumulated depreciation 218,000 194,800 Net plant and equipment 674,000 571,200 Total assets $ 1,368,000 $ 1,294,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 247,600 $ 178,200 Accrued liabilities 9,600 18,200 Income taxes payable 54,800 47,000 Total current liabilities 312,000 243,400 Bonds Payable 248,000 132,000 Total liabilities 560,000 375,400 Stockholders equity: Common stock 725,000 680,000 Retained earnings 83,000 238,600 Total stockholders' equity 808,000 918,600 Total liabilities and stockholders' equity $ 1,368,000 $ 1,294,000 Rusco Company Income Statement For This Year Ended July 31 Sales $ 1,120,000 Cost of goods sold 700,000 Gross margin 420,000 Selling and administrative expenses 299,600 Net operating income 120,400 Nonoperating items: Gain on sale of investments $ 28,000 Loss on sale of equipment (9,200) 18,800 Income before taxes 139,200 Income taxes 41,680 Net income $ 97,520 The following additional information is available for this year. The company declared and paid a cash dividend. Equipment was sold during the year for $56,800. The equipment originally cost $122,000 and had accumulated depreciation of $56,000. Long-term investments that cost $62,000 were sold during the year for $90,000. 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.