Problem $13$A$-5($Algo$)$ Prepare and Interpret a Statement of Cash Flows $[$LO$13-1,$ LO$13-7]$Mary Walker, president of Rusco Company, considers $$32,000$ to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $$27,000$ in cash was available at the end of this year. Because 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 CompanyComparative Balance Sheetat July $31$This YearLast YearAssets$$Current assets:$$Cash and cash equivalents$ $27,000$$ $47,400$Accounts Receivable$214,400225,600$Inventory$260,800203,200$Prepaid expenses$15,40029,400$Total current assets$517,600505,600$Long$-$term investments$126,000180,000$Plant and equipment$884,000762,000$Less accumulated depreciation$216,000193,600$Net plant and equipment$668,000568,400$Total assets$ $1,311,600$$ $1,254,000$Liabilities and Stockholders' Equity$$Current liabilities:$$Accounts payable$ $185,800$$ $243,200$Accrued liabilities$9,20017,400$Income taxes payable$51,60045,000$Total current liabilities$246,600305,600$Bonds Payable$236,000124,000$Total liabilities$482,600429,600$Stockholders equity:$$Common stock$690,700660,000$Retained earnings$138,300164,400$Total stockholders' equity$829,000824,400$Total liabilities and stockholders' equity$ $1,311,600$$ $1,254,000$Rusco CompanyIncome StatementFor This Year Ended July $31$Sales$$$ $1,040,000$Cost of goods sold$650,000$Gross margin$390,000$Selling and administrative expenses$278,200$Net operating income$111,800$Nonoperating items:$$Gain on sale of investments$ $26,000$Loss on sale of equipment$(8,400)17,600$Income before taxes$129,400$Income taxes$38,760$Net income$$$ $90,640$The following additional information is available for this year.$1$The company paid a cash dividend.$2$Equipment costing $$114,000$ with accumulated depreciation of $$52,000$ was sold for $$53,600.3$Long$-$term investments costing $$54,000$ were sold for $$80,000.4$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 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 this year to a cash basis.$2$Using the data from Requirement $1,$ and other data from the problem as needed, prepare a statement of cash flows for this year.