Question

The net income for Miller Bat Company was $3 million for the year ended December 31, 2004. Additional information is as follows: Depreciation on fixed assets $1,500,000 Gain from cash sales of land 200,000 Increase in accounts payable 300,000 Dividends paid on preferred stock 400,000 The net cash provided by operating activities in the statement of cash flows for the year ended December 31, 2004 is: $4,800,000. $4,600,000. $4,200,000.

Answer 1

Cash flow from operating activities is $4,600,000

Step-by-step explanation:

Given:

Net income for the year = $3,000,000

Depreciation = $1,500,000

Gain from cash sales = $200,000

Increase in accounts payable = $300,000

Dividend paid = $400,000

Cash flow from operating activities = Net income + depreciation - gain on sale of land + increase in current liabilities

= 3,000,000 - 200,000 + 1,500,000 + 300,000

=$4,600,000

Dividends on preferred stock is considered in financing activities.

Therefore, cash flow from operating activities is $4,600,000.