Question

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

Untitled Document

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.

Assuming U.S. GAAP, Mark Industries’ cash flow from operations (CFO) for the year ended December 31 was:

Group of answer choices

A. $5,900,000.

B. $4,800,000.

C. $4,400,000.

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Answer #1

Answer:

Correct answer is:

A. $5,900,000

Explanation:

Cash flow from Opeartions:

Net Income    = $3,000,000

Add: Depreciation Expense = $2,500,000

Add: Increase in Income Taxes Payable = $500,000

Add: Increase in Wages Payable = $100,000

Less: Decrease in Interest Payable = ($200,000)

----------------------------------------

Cash flow from operations (CFO) =$5,900,000

Mark Industries’ cash flow from operations (CFO) for the year ended December 31 was: = $5,900,000

As such option A is correct and other options B and C are incorrect.

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