Final answer:
The net cash provided by operating activities in the statement of cash flows for the year ended December 31 is $4,200,000.
Step-by-step explanation:
The net cash provided by operating activities in the statement of cash flows for the year ended December 31 can be calculated using the indirect method. We start with the net income and adjust it for non-cash expenses and changes in working capital. First, we add back the depreciation expense, as it is a non-cash expense. So, we add $1,500,000 to the net income. Then, we subtract the gain from the cash sale of land, as it is an investing activity and not part of operating activities. Therefore, we subtract $200,000. Next, we add the increase in accounts payable, as it represents a source of cash. So, we add $300,000. Finally, we subtract the dividends paid on preferred stock, as it is a financing activity and not part of operating activities. Therefore, we subtract $400,000. The calculation is as follows:
Net Income: $3,000,000
+ Depreciation on fixed assets: $1,500,000
- Gain from cash sale of land: $200,000
+ Increase in accounts payable: $300,000
- Dividends paid on preferred stock: $400,000
Net Cash Provided by Operating Activities: $3,000,000 + $1,500,000 - $200,000 + $300,000 - $400,000 = $4,200,000.
Therefore, the correct answer is option a. $4,200,000.