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 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 Accounts Receivable Inventory Prepaid expenses Total current assets. Long-term investments Plant and equipment Less accumulated depreciation Net plant and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds Payable Total liabilities Stockholders' equity: Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 247,700 213,400 $ 44,000 $ 67,800 260,600 276,100 27,300 49,800 608,000 578,700 177,000 265,000 918,000 779,000 224,500 198,700 693,500 580,300 $ 1,478,500 $ 1,424,000 $ 180,800 $ 261,900 10,900 20,800 65,200 53,500 338,000 255,100 287,000 158,000 625,000 413,100 822,500 745,000 31,000 853,500 $ 1,478,500 265,900 1,010,900 $ 1,424,000 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 Loss on sale of equipment Income before taxes Income taxes Net income $ 1,380,000 862,500 517,500 369,150 148,350 $ 34,500 (11,800) 22,700 171,050 51,170 $ 119,880