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. Last Year Rusco Company Comparative Balance Sheet at July 31 This Year Assets Current assetat Canh $ 35,000 Accounts receivable 224,000 Inventory 268.000 Prepaid expenses 21.000 Total current assets 548.000 Long-term investments 150,000 blant and equipment 900,000 Leu accumulated depreciation 220,000 Het plant and equipment 680,000 Total Asseto $1.378,000 Liabilities stockholders Equity Current liabilities Accounts payable 6 193,000 Noorud labiritto 10,000 Incon taxes payable 50.000 Total current liabilities 261,000 Donde payable 260,000 Total abilities 52.000 Stockholders equity: Common stock 739,400 $ 57,000 236,000 200,000 39.000 540,000 220,000 770,000 196.000 574,000 $1,334,000 252,000 19.000 49,000 320,000 120,000 440,000 700,000 Stockholders' equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 729,400 127,600 857.000 $1,378,000 700,000 194,000 894,000 $1,334,000 Ranco Company Income Statement Tor This Year Ended July 31 Sales Cout of goods sold Gross margin Selling and administrative expennen Net operating income Nonoperating Items Gain on sale of investments $ 30,000 Loss on sale of equipment (10,000) Income before taxes Income taxes Net Income $1,200,000 750,000 450,000 321,000 129,000 20,000 149,000 46.609 $104,400 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 $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. 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. 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. Required: 1. Using the direct method, adjust the company's income statement for this year to a cash basis. 2. Using the data from (1) above, and other data from the problem as needed, prepare a statement of cash flows for this year. 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 Adjustments to a cash basis: Direct Method of Determining the Net Cash flows from Operating activities Adjustments to a cash basis: 0 Adjustments to a cash basis: 0 Selling and administrative expenses Adjustments to a cash basis: Income taxes Adjustments to a cash basis: 0 s 0 Rusco Company Statement of Cash Flows For This Year Ended July 31 Operating activities: Cash received from customers Less cash disbursements for: Total cash disbursements 0 Investing activities: Financing activities: 0