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 decline in cash is puzzling to Ms. Walker. Last Year Rusco Company Comparative Balance Sheet at July 31 This Year Assets Current assets: Cash $ 45,000 Accounts Receivable 262,000 Inventory 277,000 Prepaid expenses 28,000 Total current assets 612,000 Long-term investments 180,000 Plant and equipment 920,000 Less accumulated depreciation 225,000 Net plant and equipment 695,000 Total assets $1,487,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 263,000 Accrued liabilities 11,000 Income taxes payable 66,000 Total current liabilities 340,000 Bonds Payable 290,000 Total liabilities 630,000 Stockholders' equity: Common stock 830,000 Retained earnings 27,000 Total stockholders' equity 857,000 Total liabilities and stockholders' equity $1,487,000 $ 69,000 249,000 214,000 51,000 583,000 270,000 780,000 199,000 581,000 $1,434,000 $ 181,000 21,000 54,000 256,000 160,000 416,000 750,000 268,000 1,018,000 $1,434,000 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 $ 35,000 Loss on sale of equipment (12,000) Income before taxes Income taxes Net income $1,400,000 875,000 525,000 374,500 150,500 23,000 173,500 51,900 $ 121,600 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 $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. Required: 1. Using the indirect method, compute the net cash provided by/used in operating activities for this year. 2. Prepare a statement of cash flows for this year. 3. Compute free cash flow for this year