Reference no: EM13825454 , Length:

The SCQ Corporation manufactures specialty medical tools ranging from 510,000 toS15,000 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	2010	2009
Cash	150	100
Account receivable	600		400Accounts payable	400	300
nventory	750	500	Accrued taxes payable	200	100
Current assets	1,500		1,000Current liabilities	600	400
_and	50	50
Equipment	1,300	1,200	Note payable	330	30C
Tess: Ace. depreciation	700	600	Deferred taxes	35	2C
Vet fixed assets	600	600	Equity:
Total fixed assets	650	650	Common stock	640	500
			Paid-in capital	80	80
			Retain earnings	465	350
			Total equity	1,185	930
Total assets	2,150	1,650Total	equity and liabilities	2,150	1,650

Income Statement SCQ Corporation For period ending 12131/ 2010
Items	2010	2009
Revenue	1,000	900
Cost of goods sold	400	350
Gross profit	600	550
Wages expense	110	100
Interest expense	50	40
Depreciation expense	100	90

Insurance expense	50	50
Other misc. expenses	90	80
Total expenses	400	360
Operating income	200	190
Taxes:
Deferred taxes	15	20
Taxes expense	70	67
Net income after taxes	115	103
Additions to retains earnings	115	103

Cash flows from operating activities	2010
Cash receipts
Received from sales of goods	930
Paid for inventory	400
Paid for employees	110
Paid for interest	50
Paid for taxes	70
Paid for other expenses	320
Cash paid for equipment	100
Cash received for common stock	120
Cash received from note payable	30

A - Indirect method cash flow/cash flow statement:

1-What is the operational cash flow?

2-What is the investing cash flow?

3-What is the financing cash flow?

B- Direct method cash flow:

1-What is the operational cash flow?

2-What is the investing cash flow?

3-What is the financing cash flow?

C -What are the differences in the cash flow concepts and procedures between the direct and indirect methods?