During 2014, Eagle Beach Company EBC) had sales of $1,000,000, cost of goods sold of $425,000,...

During 2014, Eagle Beach Company EBC) had sales of $1,000,000, cost of goods sold of $425,000, administrative and selling expenses of $95,000, depreciation expense of $140,000 and interest expense of $70,000. The tax rate is 35 percent. Ignore any tax loss carryback or carry forward provisions. What is the operating cash flow for EBC?

A. $340,000

B.$385,500

C.$361,000

Expert Solution

Sales revenue	$ 10,00,000
Less:
Cost Of Goods Sold	$ 4,25,000
Gross Profit	$ 5,75,000
Less:
Selling And Admin Expenses	$ 95,000
Depreciation	140000
Interest Expenses	$ 70,000
Net Income Before Tax	$ 2,70,000
Tax @ 35%	$ 94,500
Net Income After Tax	$ 1,75,500
Add: Depreciation	$ 1,40,000
Interest Expenses	$ 70,000
Cash Flow From Operation	$ 3,85,500

Correct Option: B

ekkarill92 answered 1 year ago

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