Question

Mark Industries' income statement and related notes for the year ended December 31 are as follows...

Mark Industries' income statement and related notes for the year ended December 31 are as follows (in $):

Sales 42,000,000
Cost of Goods Sold (32,000,000)
Wages Expense (1,500,000)
Depreciation Expense (2,500,000)
Interest Expense (1,000,000)
Income Tax Expense (2,000,000)
Net Income 3,000,000


During the year:
•         Wages Payable increased $100,000.
•         Accumulated Depreciation increased $2,500,000.
•         Interest Payable decreased $200,000.
•         Income Taxes Payable increased $500,000.
•         Dividends of $100,000 were declared and paid.
Under U.S. GAAP, Mark Industries' cash flow from operations (CFO) for the year ended December 31 was:

$5,900,000.

$4,400,000.

$4,800,000.
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Answer #1
Cash flows from operating activities:
Net income $    30,00,000
Adjustments to reconcile net income to net cash profived by operations:
Depreciation expense $ 25,00,000
Increase in wages payable $    1,00,000
Decrease in interest payable $   -2,00,000
Increase in income taxes payable $    5,00,000
$    29,00,000
Net cash provided by operating activities $    59,00,000
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