Mary Walker, president of Rusco Company, considers $44,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $39,000 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 $ 39,000 Accounts receivable 228,800 Inventory 271, 600 Prepaid expenses 23,800 Total current assets 563,200 Long-term investments 162,000 Plant and equipment 900,000 Less accumulated depreciation 222,000 Net plant and equipment 686,000 Total assets $1,411,200 Liabilities and stockholders' Equity Current liabilities Accounts payable $ 196,600 Accrued liabilities 10,400 Income taxes payable 61,200 Total current liabilities 268,200 Bonds payable 272.000 Total liabilities 540,200 Stockholders' equity Common stock 742,800 Retained earnings 120, 200 Total stockholders' equity 071,000 Total liabilities and stockholders equity $1,411,200 $ 61,800 241,200 210,400 43,800 557,200 240,000 774,000 197,200 576.800 91,374,000 $ 256,400 19,800 51,000 327,200 128.000 455,200 720,000 190,000 910,400 $1,374,000 Busco Company Income Statement Tor This Year Ended July 31 Sales Coat of goods sold Cross margin HAURRAR 51.280,000 100,000 400,000 SAAN Draw Rusco Company Income Statement For This Year Ended July 31 Sales Coat of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items Gain on sale of investments $ 32,000 Loss on sale of equipment (10,000) Income before taxes Income taxes Net income $1,280,000 800,000 480,000 342,400 137,600 21,200 158, 800 47.520 $ 111,280 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 $63,200. The equipment originally cost $138,000 and had accumulated depreciation of $64.000 c. Long-term investments that cost $78,000 were sold during the year for $110,000 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 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 Required 2 > 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 0 Investing activities: es 0 Financing activities: 0 0 Beginning cash and cash equivalents Ending cash and cash equivalents $ 0