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. Because 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.

The following additional information is available for this year.

1. The company paid a cash dividend.
2. Equipment costing $124,000 with accumulated depreciation of $57,000 was sold for $57,600.
3. Long-term investments costing $64,000 were sold for $92,500.
4. The company did not retire any bonds payable or repurchase any of its common stock.

Required:

For this year:

1. Determine the net cash provided by (used in) operating activities using the indirect method.
2. Prepare a statement of cash flows.
3. Compute free cash flow.

\begin{tabular}{|c|c|c|} \hline \begin{tabular}{c} Rusco Company \\ Comparative Balance Sheet \\ at July 31 \end{tabular} & This Year & Last Year \\ \hline \multicolumn{3}{|l|}{ Assets } \\ \hline \multicolumn{3}{|l|}{ Current assets: } \\ \hline Cash and cash equivalents & $32,000 & $53,400 \\ \hline Accounts Receivable & 243,800 & 232,100 \\ \hline Inventory & 265,300 & 206,200 \\ \hline Prepaid expenses & 18,900 & 35,400 \\ \hline Total current assets & 560,000 & 527,100 \\ \hline Long-term investments & 141,000 & 205,000 \\ \hline Plant and equipment & 894,000 & 767,000 \\ \hline Less accumulated depreciation & 218,500 & 195,100 \\ \hline Net plant and equipment & 675,500 & 571,900 \\ \hline Total assets & $1,376,500 & $1,304,000 \\ \hline \multicolumn{3}{|l|}{ Liabilities and Stockholders' Equity } \\ \hline Accounts payable & $248,700 & $178,400 \\ \hline Accrued liabilities & 9,700 & 18,400 \\ \hline Income taxes payable & 55,600 & 47,500 \\ \hline Total current liabilities & 314,000 & 244,300 \\ \hline Bonds Payable & 251,000 & 134,000 \\ \hline Total liabilities & 565,000 & 378,300 \\ \hline \multicolumn{3}{|l|}{ Stockholders' equity: } \\ \hline Common stock & 732,500 & 685,000 \\ \hline Retained earnings & 79,000 & 240,700 \\ \hline Total stockholders' equity & 811,500 & 925,700 \\ \hline Total liabilities and stockholders' equity & $1,376,500 & $1,304,000 \\ \hline \begin{tabular}{c} Rusco Company \\ Income Statement \\ For This Year Ended July 31 \end{tabular} & & \\ \hline ful lils real Lidued July 1 & $1,140,000 & \\ \hline Cost of goods sold & 712,500 & \\ \hline Gross margin & 427,500 & \\ \hline Selling and administrative expenses & 304,950 & \\ \hline Net operating income & 122,550 & \\ \hline \multicolumn{3}{|l|}{ Nonoperating items: } \\ \hline Gain on sale of investments & & \\ \hline Loss on sale of equipment & 19,100 & \\ \hline Income before taxes & 141,650 & \\ \hline Income taxes & 42,410 & \\ \hline Net income & $99,240 & \\ \hline \end{tabular} Determine the net cash provided by (used in) operating activities using the indirect Note: Cash outflows and amounts to be deducted should be indicated with a minus s Prepare a statement of cash flows for this year. Complete this question by entering your answers in the tabs below. Compute free cash flow for this year. Note: Negative amount should be indicated by a minus sign