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ACCT 460 Balance Sheet SCQ Corporation

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ACCT 460 Balance Sheet SCQ Corporation

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 2010 2009
Cash  150  100
Account receivable  600  400 Accounts payable 400 300
Inventory  750  500 Accrued taxes payable 200 100
Current assets 1,500 1,000 Current liabilities 600 400
Land     50      50
Equipment 1,300 1,200 Note payable 330 300
Less: Acc. depreciation  700  600 Deferred taxes  35  20
Net 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 1,650 Total equity and liabilities 2,150 1,650
Income Statement

SCQ Corporation

For period ending 12/31/ 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

The information below can be used to complete the direct method of cash flow:

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

Assignment Guidelines:

  1. 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?
  2. 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?
  3. What are the differences in the cash flow concepts and procedures between the direct and indirect methods?