Mary Walker, president of Rusco Company, considers $50,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $45,000 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 dedine 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 45,000 236,000 277,000 28,000 586,000 69,000 249,000 214,000 51,000 Account# receivable Inventory repaid pnse 583,000 Total current assets Long-term investments Plant and equipment Less accumulated 180,000 270,000 780,000 920,000 225,000 199,000 depreciation Net plant and equipment 695,000 581,000 Total asets $1,461,000 $1,434,000 Liabilitics and Stockholders Equity Current liabilities Accounts payable Accrued 1iabilitios 202,000 11,000 66,000 263,000 21,000 54,000 Income taxes payable Total current liabilities 279,000 290,000 338,000 140,000 Bonds payable Total liabilities Stockholders' equity 569,000 478,000 778,100 113,900 750,000 206,000 Common stock Retained earnings Total stockholders equity 892,000 956,000 Total liabilities and $1,461,000 $1,434,000 stockholders' equity Rusco Company Income Statement For This Year Ended July 31 Sales $1,400,000 875,000 Cost of qoods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items Gain on sale of 525,000 374,500 150,500 35,000 investments Loss on sale of (12,000) 23,000 equipment Income before taxes 173,500 51,900 Income taxes $ 121,600 Net income The following additional information is avallable for this year. a. The company declared and paid a cash dividend b. Equipment was sold during the year for $68,000. The equipment originally cost $150,000 and had accumulated depreciation of $70,000. c. Long-term investments that cost $90,000 were sold during the year for $125,000. 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: The following addltional information is avallable for this year. a. The company declared and paid a cash dividend b. Equipment was sold during the year for $68,000. The equipment originally cost $150,000 and had accumulated depreclation of $70,000. c. Long-term investments that cost $90,000 were sold during the year for $125,000. 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 Required 1 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 Net income Adjustments to a cash basis: Decrease in accounts 121,600 receivable Decrease in inventory Cost of goods sold Adjustments to a cash basis: 121,600 0 Selling and administrative expenses Adjustments to a cash basis: 0 Income taxes Adjustments to a cash basis: 121,600 Required 1 Required 2 Mary Walker, president of Rusco Company, considers $50,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $45,000 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 dedine 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 45,000 236,000 277,000 28,000 586,000 69,000 249,000 214,000 51,000 Account# receivable Inventory repaid pnse 583,000 Total current assets Long-term investments Plant and equipment Less accumulated 180,000 270,000 780,000 920,000 225,000 199,000 depreciation Net plant and equipment 695,000 581,000 Total asets $1,461,000 $1,434,000 Liabilitics and Stockholders Equity Current liabilities Accounts payable Accrued 1iabilitios 202,000 11,000 66,000 263,000 21,000 54,000 Income taxes payable Total current liabilities 279,000 290,000 338,000 140,000 Bonds payable Total liabilities Stockholders' equity 569,000 478,000 778,100 113,900 750,000 206,000 Common stock Retained earnings Total stockholders equity 892,000 956,000 Total liabilities and $1,461,000 $1,434,000 stockholders' equity Rusco Company Income Statement For This Year Ended July 31 Sales $1,400,000 875,000 Cost of qoods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items Gain on sale of 525,000 374,500 150,500 35,000 investments Loss on sale of (12,000) 23,000 equipment Income before taxes 173,500 51,900 Income taxes $ 121,600 Net income The following additional information is avallable for this year. a. The company declared and paid a cash dividend b. Equipment was sold during the year for $68,000. The equipment originally cost $150,000 and had accumulated depreciation of $70,000. c. Long-term investments that cost $90,000 were sold during the year for $125,000. 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: The following addltional information is avallable for this year. a. The company declared and paid a cash dividend b. Equipment was sold during the year for $68,000. The equipment originally cost $150,000 and had accumulated depreclation of $70,000. c. Long-term investments that cost $90,000 were sold during the year for $125,000. 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 Required 1 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 Net income Adjustments to a cash basis: Decrease in accounts 121,600 receivable Decrease in inventory Cost of goods sold Adjustments to a cash basis: 121,600 0 Selling and administrative expenses Adjustments to a cash basis: 0 Income taxes Adjustments to a cash basis: 121,600 Required 1 Required 2