Mary Walker, president of Rusco Company, considers $ to be the minimum cash balance for operating purposes. As can be
seen from the following statements, only $ 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.
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 $ The equipment originally cost $ and had accumulated depreciation
of $
c Longterm investments that cost $ were sold during the year for $
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:
Using the direct method, adjust the company's income statement for this year to a cash basis.
Using the data from above, and other data from the problem as needed, prepare a statement of cash flows for this year.
