Develop a thorough understanding of accounting standards

Question

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

• Develop a thorough understanding of accounting standards and principles.

• Fulfill the core accounting educational requirement to sit for the CPA exam.

• Prepare to practice in public and private accounting position.

• Advance to a higher professional level.