Question

Mary Walker, president of Rusco Company, considers $37,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $32,000 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. Last Year Rusco Company Comparative Balance Sheet at July 31 This Year Assets Current assets: Cash 32,000 Accounts receivable 220,400 Inventory 265, 300 Prepaid expenses 18,900 Total current assets 536, 600 Long-term investments 141,000 Plant and equipment 894,000 Less accumulated depreciation 218,500 Net plant and equipment 675,500 Total assets $1,353,100 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 190,300 Accrued liabilities 9,700 Income taxes payable 55,600 Total current liabilities 255,600 Bonds payable 251,000 Total liabilities 506,600 Stockholders' equity: Common stock 719,400 Retained earnings 127, 100 Total stockholders' equity 846,500 Total liabilities and stockholders' equity $1,353,100 $ 53,400 232,100 206,200 35,400 527, 100 205,000 767,000 195, 100 571,900 $1,304,000 $ 248, 700 18,400 47,500 314,600 134,000 448,600 685,000 170, 400 855,400 $1,304,000

2.

Answer 1

1.

Rusco Company
Direct Method of Determining the Net Cash flows from Operating activities
Sales	1140000
Adjustments to a cash basis:
Decrease in accounts receivable	11700
Cash received from customers		1151700
Cost of goods sold	712500
Adjustments to a cash basis:
Increase in inventory	59100
Decrease in accounts payable	58400
Cash disbursements for inventory purchases		830000
Selling and administrative expenses	304950
Adjustments to a cash basis:
Depreciation expense [$218500 - ($195100 - $57000)]	-80400
Decrease in prepaid expenses	-16500
Decrease in accrued liabilities	8700
Cash disbursements for selling and administrative expenses		216750
Income taxes	42410
Adjustments to a cash basis:
Increase in income taxes payable	-8100
Cash disbursements for income taxes		34310
Net cash provided by operating activities		70640

2.

Rusco Company
Statement of Cash Flows
For the Year Ended July 31, 2014
Operating activities:
Cash received from customers	1151700
Less cash disbursements for:
Inventory purchases	-830000
Selling and administrative expenses	-216750
Income taxes	-34310
Total cash disbursements	-1081060
Net cash provided by operating activities		70640
Investing activities:
Sale proceeds from equipment	57600
Sale proceeds from long-term investments	92500
Purchase of equipment [$894000 - ($767000 - $124000)]	-251000
Net cash used for investing activities		-100900
Financing activities:
Issuance of bonds payable	117000
Issuance of common stock	34400
Payment of cash dividends ($170400 + $99240 - $127100)	-142540
Net cash provided by financing activities		8860
Net decrease in cash		-21400
Beginning cash and cash equivalents		53400
Ending cash and cash equivalents		32000

Per HOMEWORKLIB RULES the first question has been answered. Please post the remaining independent question separately. Thank you.