Mary Walker, president of Rusco Company, considers $14,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $8,000 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.

The following additional information is available for the year 2015.
a. The company declared and paid a cash dividend.
b. Equipment was sold during the year for $8,000. The equipment had originally cost $20,000 and had accumulated depreciation of $10,000.
c. Long-term investments that had cost $20,000 were sold during the year for $30,000.
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 operating activities for 2015.
2. Using the data from (1) above, and other data from the problem as needed, prepare a statement of cash flows for 2015.
3. Compute free cash flow for 2015.
4. Explain the major reasons for the decline in the company's cash balance.

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Rusco Company Comparative Balance Sheet July 31, 2015 and 2014 2015 2014 Assets Current assets: $ 8,000 120,000 140,000 5,000 273,000 50,000 430,000 60,000 370,000 $693,000 21,000 80,000 90,000 9,000 200,000 70,000 300,000 50,000 250,000 $520,000 Inventory Liabilities and Stockholders' Equity Current liabilities: $123,000 8,000 20,000 151,000 70,000 221,000 60,000 17,000 12,000 89,000 0 89,000 Total liabilities Stockholders' equity: 366,000 106,000 472,000 $693,000 346,000 85,000 431,000 $520,000 Total stockholders' equity Rusco Company Income Statement For the Year Ended July 31, 2015 $500,000 300,000 200,000 158,000 42,000 Nonoperating items: $10,000 (2,000)8,000 50,000 20,000 30,000 Income before taxes Income taxes . Net income