Mary Walker, president of Rusco Company, considers $48,000 to be the minimum cash balance for operating...

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Mary Walker, president of Rusco Company, considers $48,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $43,000 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. Assets Rusco Company Comparative Balance Sheet at July 31 This Year Last Year 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 $ 43,000 $ 66,600 233,600 275,200 26,600 246,400 212,800 48,600 578,400 574,400 174,000 260,000 916,000 778,000 224,000 198,400 692,000 579,600 $ 1,444,400 $ 1,414,000 $ 200,200 $ 260,800 10,800 20,600 64,400 53,000 275,400 334,400 284,000 136,000 559,400 470,400 760,500 740,000 124,500 203,600 885,000 943,600 $ 1,444,400 $ 1,414,000 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 $ 1,360,000 850,000 510,000 363,800 146,200 $ 34,000 (11,600) 22,400 168,600 50,440 $ 118,160 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 $66,400. The equipment originally cost $146,000 and had accumulated depreciation of $68,000. c. Long-term investments that cost $86,000 were sold during the year for $120,000. d. The company did not retire any bonds payable or repurchase any of its common stock. Because the Cash account decreased so dramatically during this year, the company's executive committee is anxious to see how the income statement would appear on a cash basis. Required: 1. Using the direct method, adjust the company's income statement for this year to a cash basis. 2. Using the data from (1) above, and other data from the problem as needed, prepare a statement of cash flows for this year. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Using the direct method, adjust the company's income statement for this year to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) Rusco Company Direct Method of Determining the Net Cash flows from Operating activities Adjustments to a cash basis: Adjustments to a cash basis: Selling and administrative expenses Adjustments to a cash basis: 0 0 0 Required 1 Required 2 Using the data from (1) above, and other data from the problem as needed, prepare a statement of cash flows for this year. (Cash outflows and amounts to be deducted should be indicated with a minus sign.) Operating activities: Cash received from customers Less cash disbursements for: Rusco Company Statement of Cash Flows For This Year Ended July 31 Total cash disbursements Investing activities: Financing activities: Beginning cash and cash equivalents Ending cash and cash equivalents < Required 1 0 0 0 0 0 $ 0 Required 2 Mary Walker, president of Rusco Company, considers $48,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $43,000 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. Assets Rusco Company Comparative Balance Sheet at July 31 This Year Last Year 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 $ 43,000 $ 66,600 233,600 275,200 26,600 246,400 212,800 48,600 578,400 574,400 174,000 260,000 916,000 778,000 224,000 198,400 692,000 579,600 $ 1,444,400 $ 1,414,000 $ 200,200 $ 260,800 10,800 20,600 64,400 53,000 275,400 334,400 284,000 136,000 559,400 470,400 760,500 740,000 124,500 203,600 885,000 943,600 $ 1,444,400 $ 1,414,000 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 $ 1,360,000 850,000 510,000 363,800 146,200 $ 34,000 (11,600) 22,400 168,600 50,440 $ 118,160 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 $66,400. The equipment originally cost $146,000 and had accumulated depreciation of $68,000. c. Long-term investments that cost $86,000 were sold during the year for $120,000. d. The company did not retire any bonds payable or repurchase any of its common stock. Because the Cash account decreased so dramatically during this year, the company's executive committee is anxious to see how the income statement would appear on a cash basis. Required: 1. Using the direct method, adjust the company's income statement for this year to a cash basis. 2. Using the data from (1) above, and other data from the problem as needed, prepare a statement of cash flows for this year. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Using the direct method, adjust the company's income statement for this year to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) Rusco Company Direct Method of Determining the Net Cash flows from Operating activities Adjustments to a cash basis: Adjustments to a cash basis: Selling and administrative expenses Adjustments to a cash basis: 0 0 0 Required 1 Required 2 Using the data from (1) above, and other data from the problem as needed, prepare a statement of cash flows for this year. (Cash outflows and amounts to be deducted should be indicated with a minus sign.) Operating activities: Cash received from customers Less cash disbursements for: Rusco Company Statement of Cash Flows For This Year Ended July 31 Total cash disbursements Investing activities: Financing activities: Beginning cash and cash equivalents Ending cash and cash equivalents < Required 1 0 0 0 0 0 $ 0 Required 2