Using the indirect method, compute the net cash provided by/used in operating activities for this year.
SOLUTION AT Australian Expert Writers
Mary Walker, president of Rusco Company, considers $14,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $8,000 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 CompanyComparative Balance Sheetat July 31
Total current assets
Plant and equipment
Less accumulated depreciation
Net plant and equipment
Liabilities and Stockholders’ Equity
Income taxes payable
Total current liabilities
Total stockholders’ equity
Total liabilities and stockholders’ equity
Rusco CompanyIncome StatementFor This Year Ended July 31
Cost of goods sold
Selling and administrative expenses
Net operating income
Gain on sale of investments
Loss on sale of equipment
Income before taxes
The following additional information is available for this year.
The company declared and paid a cash dividend.
Equipment was sold during the year for $8,000. The equipment originally cost $20,000 and had accumulated depreciation of $10,000.
Long-term investments that cost $20,000 were sold during the year for $30,000.
The company did not retire any bonds payable or repurchase any of its common stock.
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.
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