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Problem 12-13A Prepare and Interpret a Statement of Cash Flows, Free Cash Flow DLO12-1, L012-2, L012-3] Mary Walker, president of Rusco Company, considers $50,000 to
Problem 12-13A Prepare and Interpret a Statement of Cash Flows, Free Cash Flow DLO12-1, L012-2, L012-3] 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 2015. 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, 2015 and 2014 2015 2014 Assets Current assets: 45,000 Cash 000 Accounts Receivable 236,000 249,000 277,000 Inventory 214,000 Prepaid expenses 28,000 51,000 586,000 583,000 Total current assets 270,000 Long-term investments 180,000 Plant and equipment 780,000 920,000 225,000 Less accumulated depreciation 199,000 695,000 581,000 Net plant and equipment Total assets 1,461,000 1,434,000 Liabilities and Stockholders' Equity Current liabilities: 202,000 263,000 Accounts payable Accrued liabilities 11,000 21,000 Income taxes payable 66,000 54,000 338,000 Total current liabilities 279,000 290,000 Bonds Payable Total liabilities 338,000 569,000 Stockholders' equity Common stock 750,000 778,000 Retained earnings 114,000 346,000 Total stockholders' equity 892,000 1,096,000 Total liabilities and stockholders' equity 1,461,000 1,434,000
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