Mary Walker, president of Rusco Company, considers $22,000 to be the minimum cash balance for operating purposes. As can beseen from the following statements, only $17,000 in cash was available at the end of this year. Since the company reported a large netincome for the year, and also issued both bonds and common stock, the sharp decline in cash is puzzling to Ms. Walker.AssetsCurrent assets:CashAccounts receivableInventoryPrepaid expensesTotal current assetsLong-term investmentsPlant and equipmentLess accumulated depreciationNet plant and equipmentTotal assetsLiabilities and Stockholders' EquityCurrent liabilities:Accounts payableAccrued liabilitiesRusco CompanyComparative Balance Sheetat July 31Income taxes payableTotal current liabilitiesBonds payableTotal liabilities.Stockholders' equity:Common stockRetained earningsTotal stockholders' equityTotal liabilities and stockholders' equityRusco CompanyIncome StatementFor This Year Ended July 31SalesCost of goods soldGross marginSelling and administrative expensesNet operating incomeNonoperating items:Gain on sale of investmentsLoss on sale of equipmentIncome before taxesIncome taxesNet incomeThis Year$ 17,000202,400251,8008,400$ 35,400212,600197,20017,400462,600130,000752,000190,600561,400$1,228,600 $ 1,154,000479,60096,000864,000211,000653,000$ 176,8008,20043,6003,600206,000434,600Last Year$ 21,000(6,400)642,300610,000151,700152,400794,000762,400$ 1,228,600 $ 1,154,000The following additional information is available for this year.$ 232,20015,40040,000287,600104,000391,600$ 840,000525,000315,000224,70090,30014,600104,90031,460$ 73,440a. The company declared and paid a cash dividend.b. Equipment was sold during the year for $45,600. The equipment originally cost $94,000 and had accumulated depreciation of$42,000.c. Long-term investments that cost $34,000 were sold during this year for $55,000.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 theincome 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.

Name: Mary Walker, president of Rusco Company, considers $22,000 to be the
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Description: Mary Walker, president of Rusco Company, considers $22,000 to be the minimum cash balance for operating purposes. As can beseen from the following statements, only $17,000 in cash was available at the end of this year. Since the company reported a l

The cash flow statement is prepared at the end of the period to determine the cash position. It…

Business

Accounting

Mary Walker, president of Rusco Company, considers $22,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $17,000 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. Assets Current assets: Cash Accounts receivable Inventory Prepaid expenses Total current assets Rusco Company Comparative Balance Sheet at July 31 This Year Last Year $ 17,000 202,400 251,800 8,400 479,600 $ 35,400 212,600 197,200 17,400 462,600

Mary Walker, president of Rusco Company, considers $22,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $17,000 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. Assets Current assets: Cash Accounts receivable Inventory Prepaid expenses Total current assets Rusco Company Comparative Balance Sheet at July 31 This Year Last Year $ 17,000 202,400 251,800 8,400 479,600 $ 35,400 212,600 197,200 17,400 462,600

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Mary Walker, president of Rusco Company, considers $21,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $16,000 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 This Year Last Year Assets Current assets: Cash $ 16,000 $ 34,200 Accounts Receivable 221,400 211,300 Inventory 250,900 196,600 Prepaid expenses 7,700 16,200 Total current assets 496,000 458,300 Long-term investments 93,000 125,000 Plant and equipment 862,000 751,000 Less accumulated depreciation 210,500 190,300 Net plant and equipment 651,500 560,700 Total assets $ 1,240,500 $ 1,144,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 231,100 $ 175,200 Accrued liabilities 8,100…
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