Sapphire Company reported the following information for the year 2014: Sales revenue of $280,000;cost of goods sold of $100,000;selling expenses of $40,000;administrative expenses of $35,000;depreciation of $25,000;interest expense of $8,000;and income tax expense of $28,000.All sales were made for cash and all expenses (other than depreciation and bond premium amortization of $2,000)were paid in cash.All current assets and current liabilities remained unchanged.How much cash was provided by operations for Sapphire Company during 2014?
A) $44,000
B) $69,000
C) $67,000
D) $71,000

Question

Quizplus · Accepted Answer

Cash provided by operations can be calculated using the indirect method of statement of cash flows. 
Net income = Sales revenue - Cost of goods sold - Selling expenses - Administrative expenses - Depreciation - Interest expense - Income tax expense 
Net income = $280,000 - $100,000 - $40,000 - $35,000 - $25,000 - $8,000 - $28,000 
Net income = $44,000 
Cash provided by operations = Net income + Depreciation 
Cash provided by operations = $44,000 + $25,000 
Cash provided by operations = $69,000

Sapphire Company Reported the Following Information for the Year 2014