Problems: Choose one of the two following problems to answer. 1. Use the following financial statements and additional information to (1) prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method, and (2) compute the company's cash flow on total assets ratio for 2011. (25 points) Wescott Company Balance Sheets At December 31 2011 2010 Assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses Equipment Accumulated depreciation-Equipment $ 85,600 65,200 72.850 56.750 157,750 144850 6080 12.680 280,600 245,600 80.600) 197.600 522.280 1480 Total assets Liabilities Accounts payable Income taxes payable Notes payable (long term) S 52.850 $ 45,450 15.240 12.240 59.200 9.200 S127.290 $136.890 Total liabilities Equity Common stock Contributed capital in excess of par Retained earnings 200,000 150,000 53.000 40,000 $394.990 $290.90 Total equity Total liabilities and equity Wescott Company Income Statement For Year Ended December 31. 2011 $488,000 Sales Cost of goods sold Depreciation expense Other operating expenses Interest expense Other gains (losses) 212,540 43,000 106,260 -6400 (368,200) Gain on sale of equipment Income before taxes 700 124.500 -41100 Income taxes expense Net income Page 7