1. Dry Mixture: Combine yeast, 1 cup flour, salt and sugar in medium size bowl. 

2. Liquid mixture: Combine milk, water and oil in a microwave-safe dish or sauce pan; heat for 2 minutes on high.

3. Combine dry mixture and liquid mixture in mixing bowl (for a stand mixer), mix with paddle attachment for 4 minutes on medium speed. Add egg; beat 1 minute. Gradually add remaining flour and knead with dough hook for 5 to 7 minutes until smooth and elastic. 

4. Place dough in lightly oiled bowl and turn to grease top. Cover loosely with damp towel; let rise until dough tests ripe. 

5. Roll dough out into a large oval, about 1 inch thick. Using something round (I use a glass drinking cup), press into the center of the oval and cut out a hole. Cover oval loosely with damp towel and let rise one more hour.

For frying

1. Heat oil in a large skillet (at least 12 inches wide to fit the large doughnut), until hot. Add dough very carefully and cook for 2-4 minutes on first side, watching carefully not to burn. Flip over and cook for 2-4 more minutes, until cooked through but not burnt. Remove from skillet and set on a few paper towels to drain off oil. 

For topping

1. Mix powdered sugar and 1 teaspoon milk. Add more milk as needed, but you want a THICK glaze. Add food coloring and mix. Spread over the top of the doughnut and then add sprinkles. Enjoy!