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Mary Walker, president of Rusco Company, considers $47,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $42,000in 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 $ 42,000 $ 65,400 Accounts Receivable 232,400 245,100 Inventory 274,300 212,200 Prepaid expenses 25,900 47,400 Total current assets 574,600 570,100 Long-term investments 171,000 255,000 Plant and equipment 914,000 777,000 Less accumulated depreciation 223,500 198,100 Net plant and equipment 690,500 578,900 Total assets $ 1,436,100 $ 1,404,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 199,300 $ 259,700 Accrued liabilities 10,700 20,400 Income taxes payable 63,600 52,500 Total current liabilities 273,600 332,600 Bonds Payable 281,000 154,000 Total liabilities 554,600 486,600 Stockholders equity: Common stock 662,500 735,000 Retained earnings 219,000 182,400 Total stockholders' equity 881,500 917,400 Total liabilities and stockholders' equity $ 1,436,100 $ 1,404,000 Rusco Company Income Statement For the Year Ended July 31, 2014 Sales $ 1,340,000 Cost of goods sold 837,500 Gross margin 502,500 Selling and administrative expenses 358,450 Net operating income 144,050 Nonoperating items: Gain on sale of investments $33,500 Loss on sale of equipment (11,400) 22,100 Income before taxes 166,150 Income taxes 49,710 Net income $ 116,440 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 $65,600. The equipment had originally cost $144,000 and had accumulated depreciation of $67,000. c. Long-term investments that had cost $84,000 were sold during the year for $117,500. d. 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 for operating activities for 2014. (Negative amount should be indicated by a minus sign.) 2. Prepare a statement of cash flows for 2014. (List any deduction in cash and cash outflows as negative amounts.) 3. Compute free cash flow for 2014. (Negative amount should be indicated by a minus sign.)

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