Use the financial statements and additional information shown to (1) prepare a statement of cash flows Exercise I 2-9 for the year ended June 30, 2005, using the indirect method, and (2) compute the cash flow on total Preparation of statement of assets ratio for Gecko, Inc., for its fiscal year 2005.

Additional Information

a. A $30,000 note payable is retired at its 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 $58,600 cash.

d. Received cash for the sale of equipment that had cost $48,600, yielding a $2,000 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.

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GECKO INC. Comparative Balance Sheets June 30, 2005 2005 2004 GECKO INC. Income Statement For Year Ended June 30, 2005 Assets Cash Inventory Sales $668,000 Accounts receivable (net) Prepaid expenses $ 85,800 70,000 $ 45,000 52,000 66,800 96,800 5,400 5.200 Cost of goods sold Gross profit. 412,000 256,000 Equipment 130,000 120,000 Operating expenses Accum, depreciation-Equip. Total assets (28.000) (10,000) $330,000 $309,000 Depreciation expense $58,600 Other expenses 67,000 Liabilities and Equity Total operating expenses 125,600 Accounts payable $ 26,000 $ 32,000 130,400 Wages payable 7,000 16,000 Other gains (losses) Income taxes payable 2,400 3,600 Gain on sale of equipment Income before taxes Income taxes expense Net income 132,400 $ 86,760 2,000 45,640 Notes payable (long term) Common stock, $5 par Retained earnings Total liabilities and equity 40,000 70,000 value 230,000 180,000 24,600 7,400 $330,000 $309,000