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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

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.

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Required 1 Required 2 Required 3 Using the indirect method, compute the net cash provided by/used in operating activities for Year 2. (List any deduction in cash outflows as negative amounts.) Joyner Company Statement of Cash Flows-Indirect Method (partial) 0 $ 0 Statement of Cash Flows For Year 2 Operating activities: Investing activities: 0 Financing activities: 0 0 Beginning cash and cash equivalents Ending cash and cash equivalents $ 0 Required 1 Required 2 Required 3 Compute the free cash flow for Year 2. (Negative amount should be indicated by a minus sign.) Free cash flow

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