Mary Walker, president of Rusco Company, considers $49,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $44,000 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.

The following additional information is available for the year 2015.

a.	The company declared and paid a cash dividend.
b.	Equipment was sold during the year for $67,200. The equipment had originally cost $148,000 and had accumulated depreciation of $69,000.
c.	Long-term investments that had cost $88,000 were sold during the year for $122,500.
d.	The company did not retire any bonds payable or repurchase any of its common stock.

Because the Cash account decreased so dramatically during 2015, the companys executive committee is anxious to see how the income statement would appear on a cash basis

REQUIRED:

1. Using the direct method, adjust the companys income statement for 2015 to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.)

2. Using the data from (1) above and other data from the problem as needed, prepare a statement of cash flows for 2015. (Cash outflows and amounts to be deducted should be indicated with a minus sign.)

Rusco Company Comparative Balance Sheet July 31, 2015 and 2014 2015 2014 Assets Current assets Cash Accounts receivable Inventory Prepaid expenses $ 44,000 $ 67,800 247,700 213,400 49,800 234,800 276,100 27,300 Total current assets 582,200 578,700 Long-term investments 177,000 265,000 918,000 224,500 779,000 198,700 Plant and equipment Less accumulated depreciation Net plant and equipment 693,500 580,300 Total assets $ 1,452,700 $1,424,000