Mary Walker, president of Rusco Company, considers $37,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $32,000 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	$ 32,000	$ 53,400
Accounts Receivable	243,800	232,100
Inventory	265,300	206,200
Prepaid expenses	18,900	35,400
Total current assets	560,000	527,100
Long-term investments	141,000	205,000
Plant and equipment	894,000	767,000
Less accumulated depreciation	218,500	195,100
Net plant and equipment	675,500	571,900
Total assets	$ 1,376,500	$ 1,304,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 248,700	$ 178,400
Accrued liabilities	9,700	18,400
Income taxes payable	55,600	47,500
Total current liabilities	314,000	244,300
Bonds Payable	251,000	134,000
Total liabilities	565,000	378,300
Stockholders equity:
Common stock	732,500	685,000
Retained earnings	79,000	240,700
Total stockholders' equity	811,500	925,700
Total liabilities and stockholders' equity	$ 1,376,500	$ 1,304,000

Rusco Company Income Statement For This Year Ended July 31
Sales		$ 1,140,000
Cost of goods sold		712,500
Gross margin		427,500
Selling and administrative expenses		304,950
Net operating income		122,550
Nonoperating items:
Gain on sale of investments	$ 28,500
Loss on sale of equipment	(9,400)	19,100
Income before taxes		141,650
Income taxes		42,410
Net income		$ 99,240

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 $57,600. The equipment originally cost $124,000 and had accumulated depreciation of $57,000.
3. Long-term investments that cost $64,000 were sold during the year for $92,500.
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.