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 $44,000in cash was available at the end of 2014. 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 July 31, 2014 and 2013
	2014		2013
Assets
Current assets:
Cash	$	44,000	$	67,800
Accounts Receivable		234,800		247,700
Inventory		276,100		213,400
Prepaid expenses		27,300		49,800
Total current assets		582,200		578,700
Long-term investments		177,000		265,000
Plant and equipment		918,000		779,000
Less accumulated depreciation		224,500		198,700
Net plant and equipment		693,500		580,300
Total assets	$	1,452,700	$	1,424,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	201,100	$	261,900
Accrued liabilities		10,900		20,800
Income taxes payable		65,200		53,500
Total current liabilities		277,200		336,200
Bonds Payable		287,000		158,000
Total liabilities		564,200		494,200
Stockholders equity:
Common stock		667,500		745,000
Retained earnings		221,000		184,800
Total stockholders' equity		888,500		929,800
Total liabilities and stockholders' equity	$	1,452,700	$	1,424,000

Rusco Company Income Statement For the Year Ended July 31, 2014
Sales		$	1,380,000
Cost of goods sold			862,500
Gross margin			517,500
Selling and administrative expenses			369,150
Net operating income			148,350
Nonoperating items:
Gain on sale of investments	$34,500
Loss on sale of equipment	(11,800)		22,700
Income before taxes			171,050
Income taxes			51,170
Net income		$	119,880

The following additional information is available for the year 2014.

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.

Required:
1.	Using the indirect method, compute the net cash for operating activities for 2014. (Negative amount should be indicated by a minus sign.)

2.	Prepare a statement of cash flows for 2014. (List any deduction in cash and cash outflows as negative amounts.)

3.	Compute free cash flow for 2014. (Negative amount should be indicated by a minus sign.)

Free Cash Flow: