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 yearSince 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 $ 52,200 230.800 205.600 34,200 522,800 200,000 766,000 194,800 218,000 Rusco Company Comparative Balance Sheet at July 31 This Year Assets Current assets: Cash $ 31,000 Accounts receivable 219,200 Inventory 264,400 Prepaid expenses 18,200 Total current assets 532,800 Long-term investments 138,000 Plant and equipment 892,000 Less accumulated depreciation Net plant and equipment 674,000 Total assets $1,344,800 Liabilities and stockholders' Equity Current liabilities: Accounts payable $ 189,400 Accrued liabilities 9,600 Income taxes payable 54,800 Total current liabilities 253,800 Bonds payable 248,000 Total liabilities 501,900 stockholders' equity! Common stock 698,800 Retained earnings 144.200 Total stockholders' equity 843,000 Total liabilities and $1,344,800 stockholders' equity 571,200 $1,294,000 $ 247,600 18,200 47.000 312.800 132,000 444,800 680,000 169 200 849,200 $1,294,000 Rusco Company Income Statement For This Year Ended July 31 $1,120.000 Cost of goods sold 700,000 Cross margin 420,000 Selling and 299,600 administrative expenses Net operating income 120,400 Nonoperating items! Gain on sale of $28,000 Investments Loss on sale of (9,200) 18,800 equipment Income before taxes 139,200 Income taxes 41,680 Net Income $ 97,520 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 $56,800. The equipment originally cost $122,000 and had accumulated depreciation of $56.000. c. Long-term investments that cost $62.000 were sold during the year for $90,000 d. The company did not retire any bonds payable or repurchase any of its common stock. Because the cash account decreased so dramatically during this year, the company's executive committee is anxious to see how the income statement would appear on a cash basis Required: Using the direct method, ad ust the company's income statement for this year to a cash basis 2. Using the data from (1) above, and other data from the problem as needed, prepare a statement of cash flows for this Complete this question by entering your answers in the tabs below. Required Required Using the direct method, adjust the company's income statement for this year to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) Rusco Company Direct Method of Determining the Net Cash flows from Operating activities Sales Adjustments to a cash basis: Decrease in accounts receivable Cost of goods sold Adjustments to a cash basis: Increase in inventory Decrease in accounts payable Selling and administrative expenses Adjustments to a cash basis: Decrease in prepaid expenses Decrease in accrued liabilities Depreciation Income taxes Ad ustments to a cash basis: Increase in income taxes payable Net cash provided by operating activities TO Required 1 Required 2 > Required Required 2 Using the data from (1) above, and other data from the problem as needed, prepare a statement of cash flows for this year. (Cash outfiows and amounts to be deducted should be indicated with a minus sign.) Show less Rusco Company Statement of Cash Flows For the Year Ended July 31, 2014 Operating activities: Cash received from customers Less cash disbursements for Cost of merchandise purchased Selling and administrative expenses Income taxes Total cash disbursements Net cash provided by operating activities Investing activities: Proceeds from sale of investments Proceeds from sale of equipment Additions to plant and equipment Sosos o co o SOS Net cash used for investing activities Financing activities: Issuance of bonds payable Issuance of common stock Cash dividends Net cash provided by financing activities Net decrease in cash Beginning cash and cash equivalents Ending cash and cash equivalents