Mary Walker, president of Rusco Company, considers $40,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $35,000 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 Assets Current assets: This Year Last Year 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 $ 35,000 248,000 $ 57,000 268,000 236,000 208,000 21,000 39,000 572,000 540,000 150,000 220,000 900,000 770,000 220,000 196,000 680,000 574,000 $ 1,402,000 $ 1,334,000 $ 252,000 10,000 $ 179,000 19,000 58,000 49,000 320,000 247,000 260,000 140,000 580,000 387,000 755,000 700,000 67,000 822,000 247,000 947,000 $ 1,402,000 $ 1,334,000 Check my work Income Statement For This Year Ended July 31 Sales $ 1,200,000 Cost of goods sold 750,000 Gross margin 450,000 Selling and administrative expenses 321,000 Net operating income 129,000 $ 30,000 (10,000) 20,000 149,000 44,600 Nonoperating items: Gain on sale of investments Loss on sale of equipment Income before taxes Income taxes Net income The following additional information is available for this year. a. The company declared and paid a cash dividend. $ 104,400 b. Equipment was sold during the year for $60,000. The equipment originally cost $130,000 and had accumulated depreciation of $60,000. c. Long-term investments that cost $70,000 were sold during the year for $100,000. d. 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Using the indirect method, compute the net cash provided by/used in operating activities for this year. (List any deduction in cash and cash outflows as negative amounts.) Rusco Company Statement of Cash Flows-Indirect Method (partial)