Mary Walker, president of Rusco Products, 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 2009. 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 2009.
Dividends totaling $9,000 were declared and paid in cash.
Equipment was sold during the year for $8,000. The equipment had originally cost $20,000 and had accumulated depreciation of $10,000.
The decrease in the Preferred Stock account is the result of a conversion of preferred stock into an equal dollar amount of common stock.
Long-term investments that had cost $20,000 were sold during the year for $30,000.
Required:
Using the indirect method, compute the net cash provided by operating activities for 2009.
Using the data from (1) above, and other data from the problem as needed, prepare a statement of cash flows for 2009.
Compute free cash flow for 2009.
Explain the major reasons for the decline in the company’s cashbalance