Problem 13-13 Prepare and Interpret a Statement of Cash Flows; Free Cash Flow (LO13-1, LO13-2, LO13-3] Mary Walker, president of Rusco Company, considers $24,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $19,000 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 Comparative Balance Sheet at July 31 This Year Assets Current assets: Cash and cash equivalents $ 19,000 Accounts receivable 225,600 Inventory 253,600 Prepaid expenses 9,800 Total current assets 508,000 Long-term investments 102,000 Plant and equipment 868,000 Less accumulated depreciation 212,000 Net plant and equipment 656,000 Total assets $1,266,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 234,400 Accrued liabilities 8,400 Income taxes payable 45,200 Total current liabilities 288,000 Bonds Payable 212,000 Total liabilities 500,000 Stockholders' equity: Common stock 635,000 Retained earnings 131,000 Total stockholders' equity 766,000 Total liabilities and stockholders' equity $1,266,000 $ 37,800 215, 200 198,400 19,800 471,200 140,000 754,000 191,200 562,800 $1,174,000 $ 175,800 15,800 41,000 232,600 108,000 340, 600 620,000 213,400 833,400 $1,174,000 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 $22,000 Loss on sale of equipment (6,800) Income before taxes Income taxes Net income $ 880,000 550,000 330,000 235,400 94,600 15,200 109,800 32,920 $ 76,880 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 $47,200. The equipment originally cost $98,000 and had accumulated depreciation of $44,000. c. Long-term investments that cost $38,000 were sold during the year for $60,000. 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Using the indirect method, compute the net cash provided by/used in operating activities for this year. (List any deduction in cash and cash outflows as negative amounts.) Rusco Company Statement of Cash Flows-Indirect Method (partial) Required 1 Required 2 > Rusco Company Statement of Cash Flows For This Year Ended July 31 Operating activities: Investing activities: Financing activities: Beginning cash and cash equivalents Ending cash and cash equivalents Complete this question by entering your answers in the tabs below. 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