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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. Complete this question by entering your answers in the tabs below. Required Required 1 2 Using the direct method, adjust the company's income statement for this year to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) Rusco Company Direct Method of Determining the Net Cash flows from Operating activities Adjustments to a cash basis: Sales Adjustments to a cash basis: Selling and administrative expenses Adjustments to a cash basis: Income taxes Adjustments to a cash basis: < Required 1 0 $ 0 0 0 Required 2 > Show less

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. Complete this question by entering your answers in the tabs below. Required Required 1 2 Using the direct method, adjust the company's income statement for this year to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) Rusco Company Direct Method of Determining the Net Cash flows from Operating activities Adjustments to a cash basis: Sales Adjustments to a cash basis: Selling and administrative expenses Adjustments to a cash basis: Income taxes Adjustments to a cash basis: < Required 1 0 $ 0 0 0 Required 2 > Show less

FINANCIAL ACCOUNTING
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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Please do both part 1 and 2

Mary Walker, president of Rusco Company, considers $39,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $34,000 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 Assets Current assets: Cash 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 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of investments This Year Last Year Loss on sale of equipment Income before taxes Income taxes Net income $ 34,000 $ 55,800 234,700 222,800 267,100 207,400 20,300 37,800 544,200 535,700 147,000 215,000 898,000 769,000 219,500 195,700 678,500 573,300 $ 1,369,700 1,324,000 Rusco Company Income Statement For This Year Ended July 31 $ 192,100 $ 250,900 18,800 48,500 318, 200 138,000 456,200 9,900 57,200 259, 200 257,000 516, 200 $ 713,900 139,600 853,500 $ 1,369,700 1,324,000 $ 29,500 (9,800) 695,000 172,800 867,800 $ The following additional information is available for this year. $ 1,180,000 737,500 442,500 315,650 126, 850 19,700 146,550 43,870 $ 102,680 a. The company declared and paid a cash dividend. b. Equipment was sold during the year for $59,200. The equipment originally cost $128,000 and had accumulated depreciation of $59,000. c. Long-term investments that cost $68,000 were sold during the year for $97,500. d. The company did not retire any bonds payable or repurchase any of its common stock.
Transcribed Image Text:Mary Walker, president of Rusco Company, considers $39,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $34,000 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 Assets Current assets: Cash 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 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of investments This Year Last Year Loss on sale of equipment Income before taxes Income taxes Net income $ 34,000 $ 55,800 234,700 222,800 267,100 207,400 20,300 37,800 544,200 535,700 147,000 215,000 898,000 769,000 219,500 195,700 678,500 573,300 $ 1,369,700 1,324,000 Rusco Company Income Statement For This Year Ended July 31 $ 192,100 $ 250,900 18,800 48,500 318, 200 138,000 456,200 9,900 57,200 259, 200 257,000 516, 200 $ 713,900 139,600 853,500 $ 1,369,700 1,324,000 $ 29,500 (9,800) 695,000 172,800 867,800 $ The following additional information is available for this year. $ 1,180,000 737,500 442,500 315,650 126, 850 19,700 146,550 43,870 $ 102,680 a. The company declared and paid a cash dividend. b. Equipment was sold during the year for $59,200. The equipment originally cost $128,000 and had accumulated depreciation of $59,000. c. Long-term investments that cost $68,000 were sold during the year for $97,500. d. The company did not retire any bonds payable or repurchase any of its common stock.
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. Complete this question by entering your answers in the tabs below. Required Required 2 Using the direct method, adjust the company's income statement for this year to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) Rusco Company Direct Method of Determining the Net Cash flows from Operating activities Sales Adjustments to a cash basis: Adjustments to a cash basis: Selling and administrative expenses Adjustments to a cash basis: Income taxes Adjustments to a cash basis: < Required 1 0 $ 0 0 0 0 Required 2 > Show less
Transcribed Image Text: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. Complete this question by entering your answers in the tabs below. Required Required 2 Using the direct method, adjust the company's income statement for this year to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) Rusco Company Direct Method of Determining the Net Cash flows from Operating activities Sales Adjustments to a cash basis: Adjustments to a cash basis: Selling and administrative expenses Adjustments to a cash basis: Income taxes Adjustments to a cash basis: < Required 1 0 $ 0 0 0 0 Required 2 > Show less
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