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 SheetSCQ CorporationFor period ending 12/31/2010Assets20102009Liabilities20102009Cash 150 100Account receivable 600 400Accounts payable400300Inventory 750 500Accrued taxes payable200100Current assets1,5001,000Current liabilities600400Land 50 50Equipment1,3001,200Note payable330300Less: Acc. depreciation 700 600Deferred taxes 35 20Net fixed assets 600 600Equity:Total fixed assets 650 650Common stock 640500Paid-in capital 80 80Retain earnings 465350Total equity1,185930Total assets2,1501,650Total equity and liabilities2,1501,650Income StatementSCQ CorporationFor period ending 12/31/ 2010Items20102009Revenue1,000900Cost of goods sold 400350Gross profit 600550Wages expense 110100Interest expense 5040Depreciation expense 10090Insurance expense 5050Other misc. expenses 9080Total expenses 400360Operating income 200190Taxes:Deferred taxes 1520Taxes expense 7067Net income after taxes115103Additions to retains earnings115103The information below can be used to complete the direct method of cash flow:Cash flows from operating activities2010Cash receiptsReceived from sales of goods930Paid for inventory 400Paid for employees 110Paid for interest 50Paid for taxes 70Paid for other expenses 320Cash paid for equipment100Cash received for common stock120Cash received from note payable 30Assignment Guidelines:Indirect method cash flow/cash flow statement:What is the operational cash flow?What is the investing cash flow?What is the financing cash flow?Direct method cash flow:What is the operational cash flow?What is the investing cash flow?What is the financing cash flow?What are the differences in the cash flow concepts and procedures between the direct and indirect methods