Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1and 2:

The company’s income statement for Year 2 follows:

Equipment that had cost $40,000 and on which there was accumulated depreciation of $30,000 was sold during Year 2 for $18,000. Cash dividends totaling $15,000 were declared and paid during Year 2.

Required:

1. Using the indirect method, compute the net cash provided by operating activities for Year 2.

2. Prepare a statement of cash flows for Year 2.

3. Compute the free cash flow for Year 2.

4. Briefly explain why cash declined so sharply during the year.

Yeer2 Year 1 Debit Balance Accounts $ 21,000 Cash 4,000 Accounts Receivable 250,000 170,000 Inventory 310,000 260,000 Prepaid Expenses 7,000 14,000 Loan to Hymas Company 40,000 Plant and Equipment 510,000 400,000 $ 865,000 Total debits $1,121,000 Credit Balance Accounts $ 132,000 $ 120,000 Accumulated Depreciation Accounts Payable 310,000 250,000 Accrued Liabilities 20,000 30,000 Bonds Payable 190,000 70,000 Deferred Income Taxes 45,000 42,000 Common Stock 300,000 270,000 Retained Earnings 124,000 83,000 $ 865,000 Total credits $1,121,000