1. Joyner Companys income statement for Year 2 follows:

Sales	$	715,000
Cost of goods sold		59,000
Gross margin		656,000
Selling and administrative expenses		150,200
Net operating income		505,800
Nonoperating items:
Gain on sale of equipment		6,000
Income before taxes		511,800
Income taxes		204,720
Net income	$	307,080

Its balance sheet amounts at the end of Years 1 and 2 are as follows:

	Year 2			Year 1
Assets
Cash	$	280,380		$	77,800
Accounts receivable		228,000			126,000
Inventory		320,000			279,000
Prepaid expenses		10,000			20,000
Total current assets		838,380			502,800
Property, plant, and equipment		624,000			509,000
Less accumulated depreciation		166,200			130,400
Net property, plant, and equipment		457,800			378,600
Loan to Hymans Company		43,000			0
Total assets	$	1,339,180		$	881,400
Liabilities and Stockholders' Equity
Accounts payable	$	317,000		$	264,000
Accrued liabilities		41,000			50,000
Income taxes payable		84,900			80,400
Total current liabilities		442,900			394,400
Bonds payable		190,000			113,000
Total liabilities		632,900			507,400
Common stock		343,000			284,000
Retained earnings		363,280			90,000
Total stockholders' equity		706,280			374,000
Total liabilities and stockholders' equity	$	1,339,180		$	881,400

Equipment that had cost $31,600 and on which there was accumulated depreciation of $10,300 was sold during Year 2 for $27,300. The company declared and paid a cash dividend during Year 2. It did not retire any bonds or repurchase any of its own stock.

Required:

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

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

3. Compute the free cash flow for Year 2.