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 2015. 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 July 31, 2015 and 2014 2015 2014 Assets Current assets Cash Accounts Receivable Inventory Prepaid expenses $ 35,000 $57,000 236,000 208,000 39,000 224,000 268,000 21,000 Total current assets 548,000 540,000 Long-term investments 150,000 220,000 Plant and equipment 900,000 220,000 770,000 196,000 Less accumulated depreciation Net plant and equipment 680,000 574,000 Total assets $ 1,378,000 $1,334,000 Liabilities and Stockholders' Equity Current liabilities Accounts payable Accrued liabilities Income taxes payable $ 193,000 252,000 19,000 49,000 10,000 58,000 Total current liabilities Bonds Payable 261,000 260,000 320,000 Total liabilities 521,000 320,000 Stockholders' equity: Common stock Retained earnings 729,000 128,000 700,000 314,000