Mary Walker, president of Rusco Company, considers $39,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $34,000 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. Assets Rusco Company Comparative Balance Sheet at July 31 This Year Last Year Current assets: Cash Accounts Receivable Inventory Prepaid expenses Total current assets Long-term investments Plant and equipment Less accumulated depreciation Net plant and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds Payable Total liabilities Stockholders' equity: Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 34,000 246,600 $ 55,800 234,700 267,100 207,400 20,300 37,800 568,000 535,700 147,000 215,000 898,000 769,000 219,500 195,700 678,500 573,300 $ 1,324,000 $ 1,393,500 $ 250,900 9,900 $ 178,800 18,800 57,200 48,500 318,000 246,100 257,000 138,000 575,000 384,100 747,500 695,000 71,000 244,900 818,500 939,900 $ 1,393,500 $1,324,000 Rusco Company Income Statement For This Year Ended July 31 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of investments Loss on sale of equipment Income before taxes Income taxes Net income $ 1,180,000 737,500 442,500 315,650 126,850 $ 29,500 (9,800) 19,700 146,550 43,870 $ 102,680