Mary Walker, president of Rusco Company, considers $48,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $43,000 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

This Year Last Year

Assets

Current assets:

Cash and cash equivalents $ 43,000 $ 66,600

Accounts receivable 233,600 246,400

Inventory 275,200 212,800

Prepaid expenses 26,600 48,600

Total current assets 578,400 574,400

Long-term investments 174,000 260,000

Plant and equipment 916,000 778,000

Less accumulated depreciation 224,000 198,400

Net plant and equipment 692,000 579,600

Total assets $ 1,444,400 $ 1,414,000

Liabilities and Stockholders' Equity

Current liabilities: Accounts payable $ 200,200 $ 260,800

Accrued liabilities 10,800 20,600

Income taxes payable 64,400 53,000

Total current liabilities 275,400 334,400

Bonds payable 284,000 136,000

Total liabilities 559,400 470,400

Stockholders equity:

Common stock 760,500 740,000

Retained earnings 124,500 203,600

Total stockholders' equity 885,000 943,600

Total liabilities and stockholders' equity $ 1,444,400 $ 1,414,000

Rusco Company

Income Statement

For This Year Ended July 31

Sales $ 1,360,000

Cost of goods sold 850,000

Gross margin 510,000

Selling and administrative expenses 363,800

Net operating income 146,200

Nonoperating items:

Gain on sale of investments $ 34,000

Loss on sale of equipment (11,600 ) 22,400

Income before taxes 168,600

Income taxes 50,440

Net income $ 118,160

The following additional information is available for this year.

The company declared and paid a cash dividend.

Equipment was sold during the year for $66,400. The equipment originally cost $146,000 and had accumulated depreciation of $68,000.

Long-term investments that cost $86,000 were sold during the year for $120,000.

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 companys executive committee is anxious to see how the income statement would appear on a cash basis.

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.

Mary Walker, president of Rusco Company, considers $48,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $43,000 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 This Year Last Year Assets Current assets: Cash and cash equivalents $ 43,000 $ 66,600 Accounts receivable 233,600 246,400 Inventory 275,200 212,800 Prepaid expenses 26,600 48,609 Total current assets 578,400 574,400 Long-term investments 174,000 260,000 Plant and equipment 916,000 778,000 Less accumulated depreciation 224,900 198,400 Net plant and equipment 692,000 579,600 Total assets $1,444,400 $1,414,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 200,200 $ 260,800 Accrued liabilities 10.800 20,600 Income taxes payable 64,400 53,000 Total current liabilities 275,400 334,400 Bonds payable 204,000 136,000 Total Habilities 559,400 470,400 Stockholders equity Common stock 760,500 740,000 tetained earnings 124,500 203.60 Total stockholders equity 385,000 943X600 Total liabilities and stockholders' equity $1,444,400 $1,414,000 Rusco Company Income Statement For This Year Ended July 31 Sales Cost of woods sold Gross marca Selling and administrative expenses Het operating income Honoperating Items Gain on sale of investments $ 34,000 Loss on sale of equipment (11,600 Income before taxes Income taxes Net income $1,360,000 050,000 510,000 303,300 146,200 22,400 168,00 50:44 $ 118,160 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 $66,400. The equipment originally cost $146,000 and had accumulated depreciation of $68,000 c Long-term investments that cost $86,000 were sold during the year for $120,000 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: 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. 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 to be deducted should be indicated with a minus sign.) Rusco Company Direct Method of Determining the Net Cash Flows from Operating Activities Sales $ 1,360,000 Adjustments to a cash basis: Decrease in accounts receivable 12,800 1,372,800 Cost of goods sold 850,000 Adjustments to a cash basis: Increase in inventory 62,400 Decrease in accounts payable 60,600 973,000 Selling and administrative expenses Adjustments to a cash basis: Decrease in prepaid expenses (22,000) Decrease in accrued liabilities 9,800 Depreciation (93,600) (105,800) Income taxes 50,440 Adjustments to a cash basis: 50,440 455,160 Net cash provided by operating activities $ Required 2 > 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 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 0 Investing activities: 0 Financing activities 0 0 Beginning cash and cash equivalents Ending cash and cash equivalents S 0