Question

The current sections of Blue Spruce Corp.’s balance sheets at December 31, 2019 and 2020, are presented here. Blue Spruce’s net income for 2020 was $151,700. Depreciation expense was $24,300. 2019 2018 Current assets Cash $103,000 $98,300 Accounts receivable 108,400 77,900 Inventory 157,700 171,100 Prepaid expenses 26,500 25,100 Total current assets $395,600 $372,400 Current liabilities Accrued expenses payable $15,400 $9,100 Accounts payable 85,200 95,300 Total current liabilities $100,600 $104,400 Prepare the net cash provided by operating activities section of the company’s statement of cash flows for the year ended December 31, 2020, using the indirect method.

Answer 1

Answer and Explanation:

The preparation of net cash provided by operating activities is shown below:-

                                          Blue Spruce Corp.’s

                               Partial Statement of Cash Flows

                     For the Year Ended December 31, 2020

Particulars                                    Amount

Net cash flow from operating

activities

Net income                                                         $151,700

Adjustments to reconcile

net income to net cash

provided by operating activities

Depreciation expense                  $24,300

Increase in Accrued

Expense payable                            $6,300    

($15,400 - $9,100)

Decrease in inventory                    $13,400    

($157,700 - $171,100)

Increase in prepaid insurance       ($1,400)    

($26,500 - $25,100)

Increase in accounts receivable   ($30,500)  

($108,400 - $77,900)

Decrease in accounts payable       ($10,100)       $2,000

($85,200 - $95,300)

Net cash provided by

operating activities                                               $153,700