70.2K

Verified Solution

Link Copied!

Mary Walker, president of Rusco Company, considers $29,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $24,000 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 9 $ 24,000 210,800 258,100 15:13,300 BE506,200 553 117,000 878,000 214,500 663,500 $1,286,700 221,700 201,400 25,800 492,700 165,000 759,000 192, 700 566,300 $1,224,000 Assets Current assets: Cash and cash equivalents Accounts receivable Inventory Prepaid expenses Total current assets Long-term investments Plant and equipment Less accumulated depreciation Net plant and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Stockholders' equity: Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 183,100S B, 900 49,200 241,200 227,000 460,200 239,900 16,800 43,500 300.200 119,000 418,200 669,500 49,000 818,500 B6,700 645,000 160,800 805,800 $1,224,000 Check my work KUSCO company Income Statement For This Year Ended July 31 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items : Gain on sale of investments Loss on sale of equipment Income before taxes Income taxes Net income $980,000 612,500 367,500 262,150 105,350 00) 16,700 122.050 36,570 $ 85,480 The following additional information is available for this year. - a. The company declared and paid a cash dividend. b. Equipment was sold during the year for $51,200. The equipment originally cost $108,000 and had accumulated depreciation of $49,000. c. Long-term investments that cost $48,000 were sold during the year for $72,500. d. 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 company's executive committee is anxious to see how the income statement would appear on a cash basis. Required: 1. Using the direct method, adjust the company's income statement for this year to a cash basis. 2. Using the data from (1) above, and other data from the problem as needed, prepare a statement of cash flows for this year

Answer & Explanation Solved by verified expert

See Answer