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req 1.

Mary Walker, president of Rusco Company, considers $43,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $38,000 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 k Rusco Company Comparative Balance Sheet at July 31 aces This Year Last Year Assets Rusco Company Comparative Balance Sheet at July 31 This Year Last Year $ 38,000 252,200 270, 790 23, 100 584,000 159,900 906,000 221,500 684,500 $ 1,427,500 $ 60,600 239,900 209,800 42,600 552,900 235,000 773,000 196,900 576,100 $ 1,364,000 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 $ 255,300 10, 300 60,400 326,000 269,000 595,000 $ 179,600 19,600 50,500 249,700 146,000 395,700 777,500 55,000 832,500 $ 1,427,500 715,000 253,300 968,300 $ 1,364,000 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 $ 1,260,000 787,500 472,509 337,050 135,450 $ 31,500 (10,600) 20,900 156,350 46,790 $ 109,560 es 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 $62,400. The equipment originally cost $136,000 and had accumulated depreciation of $63,000 c. Long-term investments that cost $76,000 were sold during the year for $107,500. 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 provided by/used in operating activities for this year. 2. Prepare a statement of cash flows 3. Compute free cash flow for this year. this year. Rusco Company Statement of Cash Flows For This Year Ended July 31 Operating activities: Investing activities: 0 Financing activities: 0 0 Beginning cash and cash equivalents Ending cash and cash equivalents S 0 Required 1 Required 2 Required 3 Compute free cash flow for this year. (Negative amount should be indicated by a minus sign.). Free cash flow