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The SCQ Corporation manufactures specialty medical tools ranging from $10,000 to$15,000 per unit. The tools are used in hospitals, clinics, and the home hospitality market. SCQ Corporation has contracted with YOUCPA to assist in creating its cash flow statement. In the past, its income statement and balance sheet have been prepared by the internal accountant.
It would like you to assist in preparing the cash flows using both the direct and indirect method. Sales and balance sheet information for the years 2009-2010 are below:
Balance Sheet
SCQ Corporation
For period ending 12/31/2010
Assets
2010
2009
Liabilities
Cash
150
100
Account receivable
600
400
Accounts payable
300
Inventory
750
500
Accrued taxes payable
200
Current assets
1,500
1,000
Current liabilities
Land
50
Equipment
1,300
1,200
Note payable
330
Less: Acc. depreciation
700
Deferred taxes
35
20
Net fixed assets
Equity:
Total fixed assets
650
Common stock
640
Paid-in capital
80
Retain earnings
465
350
Total equity
1,185
930
Total assets
2,150
1,650
Total equity and liabilities
Income Statement
For period ending 12/31/ 2010
Items
Revenue
900
Cost of goods sold
Gross profit
550
Wages expense
110
Interest expense
40
Depreciation expense
90
Insurance expense
Other misc. expenses
Total expenses
360
Operating income
190
Taxes:
15
Taxes expense
70
67
Net income after taxes
115
103
Additions to retains earnings
The information below can be used to complete the direct method of cash flow:
Cash flows from operating activities
Cash receipts
Received from sales of goods
Paid for inventory
Paid for employees
Paid for interest
Paid for taxes
Paid for other expenses
320
Cash paid for equipment
Cash received for common stock
120
Cash received from note payable
30
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