Most work has been done - please provide answers for question 2

Operative Activities:
Cash received from Customers
Less Cash disbursements for:
Selling and administrative expenses
Income Taxes
Cost of merchandise purchased

Mary Walker, president of Rusco Company, considers $23,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $18,000 in cash was available at the end of 2014. 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, 2014 and 2013
	2014		2013
Assets
Current assets:
Cash	$	18,000	$	36,600
Accounts receivable		203,600		213,900
Inventory		252,700		197,800
Prepaid expenses		9,100		18,600
Total current assets		483,400		466,900
Long-term investments		99,000		135,000
Plant and equipment		866,000		753,000
Less accumulated depreciation		211,500		190,900
Net plant and equipment		654,500		562,100
Total assets	$	1,236,900	$	1,164,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	177,700	$	233,300
Accrued liabilities		8,300		15,600
Income taxes payable		44,400		40,500
Total current liabilities		230,400		289,400
Bonds payable		209,000		106,000
Total liabilities		439,400		395,400
Stockholders equity:
Common stock		602,500		615,000
Retained earnings		195,000		153,600
Total stockholders' equity		797,500		768,600
Total liabilities and stockholders' equity	$	1,236,900	$	1,164,000
Rusco Company
Income Statement
For the Year Ended July 31, 2014
Sales		$	860,000
Cost of goods sold			537,500
Gross margin			322,500
Selling and administrative expenses			230,050
Net operating income			92,450
Nonoperating items:
Gain on sale of investments	$21,500
Loss on sale of equipment	(6,600)		14,900
Income before taxes			107,350
Income taxes			32,190
Net income		$	75,160
The following additional information is available for the year 2014.
a. The company declared and paid a cash dividend.
b. Equipment was sold during the year for $46,400. The equipment had originally cost $96,000 and had accumulated depreciation of $43,000.
c. Long-term investments that had cost $36,000 were sold during the year for $57,500.
d. The company did not retire any bonds payable or repurchase any of its common stock.
Because the Cash account decreased so dramatically during 2014, the companys executive committee is anxious to see how the income statement would appear on a cash basis.
Required:
1. Using the direct method, adjust the companys income statement for 2014 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
Sales		860,000
Adjustments to a cash Basis:
Decrease in A/R		10,300
				870,300
Cost of Goods Sold
Adjustments to a cash Basis:
Increase in Inventory		54,900
Decrease in A/P		55,600
				110,500
Selling and Administrative Expenses
Adjustments to a cash basis:
Depreciation Charge		(63,600)
Decrease in accured liabilities		7,300
Decrease in prepaid expenses		(9,500)
				(65,800)
Income Taxes
Adjustments to a cash basis:
Increase in income taxes payable		(3,900)
				(3,900)
				829,500
2. Using the data from (1) above and other data from the problem as needed, prepare a statement of cash flows for 2014. (Cash outflows and amounts to be deducted should be indicated with a minus sign.)
Rusco Company
Statement of Cash Flows
For the Year Ended July 31, 2014
Operative Activities:
Cash received from Customers
Less Cash disbursements for:
Selling and administrative expenses
Income Taxes
Cost of merchandise purchased
Total Cash Disbursements
Investing Activities:
Proceeds from sale of equipment		46,400
Proceeds from Sale of Investments		57,500
Additions to plant and equipment		(209,000)
NET CASH USED FOR INVESTING ACTIVITIES				(105,100)
Financing Activities:
Cash dividends		(33,760)
Increase in Common Stock		(12,500)
NET CASH PROVIDED BY FINANCING ACTIVITIES				56,740
Net decrease in cash
Beginning cash and cash equivalents				36,600
Ending cash and equivalents