Mary Walker, president of Rusco Company, considers $$27,000$ to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $$22,000$ 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.

Rusco Company

Comparative Balance Sheet

at July $31$

This Year Last Year

Assets

Current assets:

Cash $ $22,000$ $ $41,400$

Accounts Receivable $229,800219,100$

Inventory $256,300200,200$

Prepaid expenses $11,90023,400$

Total current assets $520,000484,100$

Long$-$term investments $111,000155,000$

Plant and equipment $874,000757,000$

Less accumulated depreciation $213,500192,100$

Net plant and equipment $660,500564,900$

Total assets $ $1,291,500$ $ $1,204,000$

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ $237,700$ $ $176,400$

Accrued liabilities $8,70016,400$

Income taxes payable $47,60042,500$

Total current liabilities $294,000235,300$

Bonds Payable $221,000114,000$

Total liabilities $515,000349,300$

Stockholders$$ equity:

Common stock $657,500635,000$

Retained earnings $119,000219,700$

Total stockholders' equity $776,500854,700$

Total liabilities and stockholders' equity $ $1,291,500$ $ $1,204,000$

Rusco Company

Income Statement

For This Year Ended July $31$

Sales $ $940,000$

Cost of goods sold $587,500$

Gross margin $352,500$

Selling and administrative expenses $251,450$

Net operating income $101,050$

Nonoperating items:

Gain on sale of investments $ $23,500$

Loss on sale of equipment $(7,400)16,100$

Income before taxes $117,150$

Income taxes $35,110$

Net income $ $82,040$

The following additional information is available for this year.

The company declared and paid a cash dividend.

Equipment was sold during the year for $$49,600.$ The equipment originally cost $$104,000$ and had accumulated depreciation of $$47,000.$

Long$-$term investments that cost $$44,000$ were sold during the year for $$67,500.$

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.