Mary Walker, president of Rusco Company, considers $38,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $33,000 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 33,000 221,600 54,600 233,400 206,800 Accounts receivable Inventory 266,200 Prepaid expenses 19,600 540,400 36,600 531,400 210,000 Total current assets Long-term investments Plant and equipment Less accumulated depreciation Net plant and equipment 144,000 896,000 768,000 195,400 572,600 219,000 677,000 $1,361,400 $1,314,000 Total assets Liabilities and Stockholders' Equity Current liabilities: $ 191,200 Accounts payable Accrued liabilities 249,800 18,600 48,000 9,800 56,400 Income taxes payable Total current liabilities 257,400 254,000 511,400 316,400 136,000 452,400 Bonds payable Total liabilities Stockholders' equity: Common stock 715,400 134,600 690,000 171,600 Retained earnings Total stockholders equity 850,000 861,600 $1,361,400 1,314,000 Total liabilities and stockholders' equity Rusco Company Income Statement For This Year Ended July 31 Sales $1,160,000 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of investments 725,000 435,000 310,300 124,700 $29,000 (9,600) Loss on sale of equipment 19,400 Income before taxes 144,100 Income taxes 43,140 Net income 100,960 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 $58,400. The equipment originally cost $126,000 and had accumulated depreciation of $58,000 Long-term investments that cost $66,000 were sold during the year for $95,000. d. The company did not retire any bonds payable or repurchase any of its common stock C. 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. Complete this question by entering your answers in the tabs below Required 1 Required 2 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 Net income Adjustments to a cash basis: Depreciation 0 Adjustments to a cash basis: 0 Selling and administrative expenses Adjustments to a cash basis: 0 Income taxes Adjustments to a cash basis: 0 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 outflows and amounts to be deducted should be indicated with a minus sign.) Rusco Company Statement of Cash Flows For the Year Ended July 31, 2014 Operating activities: Cash received from customers Less cash disbursements for: Total cash disbursements Investing activities: Financing activities: Beginning cash and cash equivalents Ending cash and cash equivalents Required 2