Exercise 12-10 Preparation of statement of cash flows (indirect) L.O. P1 [The following information applies to the questions displayed below.] Use the following financial statements and additional information. GECKO INC. Comparative Balance Sheets June 30, 2011 and 2010 2011 2010 Assets Cash $ 75,650 $ 51,100 Accounts receivable, net 75,800 58,800 Inventory 76,550 109,550 Prepaid expenses 5,850 5,600 Equipment 144,800 135,800 Accum. depreciation—Equipment (28,850 ) (10,850 ) Total assets $ 349,800 $ 350,000 Liabilities and Equity Accounts payable $ 28,400 $ 36,400 Wages payable 10,200 18,200 Income taxes payable 2,800 4,200 Notes payable (long term) 29,450 79,450 Common stock, $5 par value 206,000 156,000 Retained earnings 72,950 55,750 Total liabilities and equity $ 349,800 $ 350,000 GECKO INC. Income Statement For Year Ended June 30, 2011 Sales $ 879,000 Cost of goods sold 562,560 Gross profit 316,440 Operating expenses Depreciation expense $ 79,884 Other expenses 91,697 Total operating expenses 171,581 144,859 Other gains (losses) Gain on sale of equipment 2,813 Income before taxes 147,672 Income taxes expense 50,947 Net income $ 96,725 Additional Information a. A $50,000 note payable is retired at its $50,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New equipment is acquired for $79,884 cash. d. Received cash for the sale of equipment that had cost $70,884, yielding a $2,813 gain. e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. f. All purchases and sales of merchandise inventory are on credit.

(2)

Compute the company's cash flow on total assets ratio for its fiscal year 2011.