Mary Walker, president of Rusco Company, considers $43,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $38,000 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 assets: Cash and cash equivalents $ 38,000 Accounts receivable 227,600 Inventory 270,700 Prepaid expenses 23,100 Total current assets 559,400 Long-term investments 159,000 Plant and equipment 906,000 Less accumulated depreciation 221,500 Net plant and equipment 684,500 Total assets $1,402,900 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 195,700 Accrued liabilities 10,300 Income taxes payable 60,400 Total current liabilities 266,400 Bonds payable 269,000 Total liabilities 535,400 Stockholders' equity: Common stock 737,300 Retained earnings 130,200 Total stockholders' equity 867,500 Total liabilities and stockholders' equity $1,402,900 $ 60,600 239,900 209,800 42,600 552,900 235,000 773,000 196,900 576, 100 $1,364,000 $ 255,300 19,600 50,500 325,400 126,000 451,400 715,000 197,600 912,600 $1,364,000 Rusco Company Income Statement For This Year Ended July 31 Stockholders' equity: Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 737,300 130,200 867,500 $1,402,900 715,000 197,600 912,600 $1,364,000 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 $ 31,500 Loss on sale of equipment (10,600) Income before taxes Income taxes Net income $1,260,000 787,500 472,500 337,050 135,450 20,900 156, 350 46,790 $ 109,560 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 $62,400. The equipment originally cost $136,000 and had accumulated depreciation of $63,000. c. Long-term investments that cost $76,000 were sold during the year for $107,500. 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: 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 $ 0 Complete this question by entering your answers in the tabs below. Required 1 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 This Year Ended July 31 Operating activities: Cash received from customers Less cash disbursements for: Total cash disbursements 0 Investing activities: 0 Financing activities 0