roblem $15-13($Algo$)$ Prepare and Interpret a Statement of Cash Flows; Free Cash Flow $[$LO$15-1,$ LO$15-2,$ LO$15-3]$

Mary Walker, president of Rusco Company, considers $$33,000$ to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $$28,000$ 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 $ $28,000$ $ $48,600$

Accounts Receivable $238,200226,900$

Inventory $261,700203,800$

Prepaid expenses $16,10030,600$

Total current assets $544,000509,900$

Long$-$term investments $129,000185,000$

Plant and equipment $886,000763,000$

Less accumulated depreciation $216,500193,900$

Net plant and equipment $669,500569,100$

Total assets $ $1,342,500$ $ $1,264,000$

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ $244,300$ $ $177,600$

Accrued liabilities $9,30017,600$

Income taxes payable $52,40045,500$

Total current liabilities $306,000240,700$

Bonds Payable $239,000126,000$

Total liabilities $545,000366,700$

Stockholders$$ equity:

Common stock $702,500665,000$

Retained earnings $95,000232,300$

Total stockholders' equity $797,500897,300$

Total liabilities and stockholders' equity $ $1,342,500$ $ $1,264,000$

Rusco Company

Income Statement

For This Year Ended July $31$

Sales $ $1,060,000$

Cost of goods sold $662,500$

Gross margin $397,500$

Selling and administrative expenses $283,550$

Net operating income $113,950$

Nonoperating items:

Gain on sale of investments $ $26,500$

Loss on sale of equipment $(8,600)17,900$

Income before taxes $131,850$

Income taxes $39,490$

Net income $ $92,360$

The following additional information is available for this year.

The company declared and paid a cash dividend.

Equipment was sold during the year for $$54,400.$ The equipment originally cost $$116,000$ and had accumulated depreciation of $$53,000.$

Long$-$term investments that cost $$56,000$ were sold during the year for $$82,500.$

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.