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The comparative balance sheets for Blue Spruce Company show these changes in noncash current asset accounts: accounts receivable decreased $75,700, prepaid expenses increased $26,400, and inventories increased $43,500.Compute net cash provided by operating activities using the indirect method, assuming that net income is $190,000.

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Answer:

$183,200

Step-by-step explanation:

To compute net cash provided by operating activities using the indirect method, we need to adjust net income by accounting for changes in noncash current asset accounts.

Net cash provided by operating activities can be calculated using the following formula:

Net cash provided by operating activities = Net income + Depreciation and amortization expense +/- Changes in noncash current assets +/- Changes in noncash current liabilities

Given:

Net income = $190,000

Changes in noncash current asset accounts:

Accounts receivable decreased $75,700

Prepaid expenses increased $26,400

Inventories increased $43,500

Let's calculate the net cash provided by operating activities step by step:

Start with net income: $190,000

Adjust for changes in noncash current asset accounts:

Accounts receivable decreased $75,700: Subtract $75,700

Prepaid expenses increased $26,400: Add $26,400

Inventories increased $43,500: Add $43,500

Net income adjusted for changes in noncash current asset accounts:

$190,000 - $75,700 + $26,400 + $43,500

The final result is the net cash provided by operating activities:

Net cash provided by operating activities = $190,000 - $75,700 + $26,400 + $43,500

Using a calculator, we can compute the value:

Net cash provided by operating activities ≈ $183,200

Therefore, the net cash provided by operating activities, using the indirect method, is approximately $183,200.

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