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Mary Walker president of Rusco Company considers $14000 to be the minimum cash balance for operating purposes

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 2015. 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 the year 2015. a. The company declared and paid a cash dividend. b. Equipment was sold during the year for $8,000. The equipment had originally cost $20,000 and had accumulated depreciation of $10,000. c. Long-term investments that had cost $20,000 were sold during the year for $30,000. 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 provided by operating activities for 2015. 2. Using the data from (1) above, and other data from the problem as needed, prepare a statement of cash flows for 2015. 3. Compute free cash flow for 2015. 4. Explain the major reasons for the decline in the company s cash balance.

Apr 24 2020 View more View Less

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