Joyner Company s income statement for Year 2 Tollows: Joyner Company's Income Statement Sales $ 900,000 Cost of goods sold 500, 000 Gross margin 400,090 Selling and administrative expenses 328, 000 Net operating income 72,000 Nonoperating items: Gain on sale of equipment 8,000 Income before taxes 80, 060 Income taxes 24 ,000 Net income $ 56,000 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Joyner Company's Balance Sheet Year 2 Year 1 Assets Cash $ 4,000 $ 21, 000 Accounts receivable 250,000 170,000 Inventory 310,000 260, 000 Prepaid expenses 7,000 14, 900 Total current assets 571,006 465,000 Property, plant, and equipment 510,000 400, 000 Less accumulated depreciation 132,000 120, 000 Net property, plant, and equipment 378,000 280,900 Loan to Hymans Company 40,000 Total assets $ 989,000 $ 745, 090 Liabilities and Stockholders' Equity Accounts payable 310, 000 250, 000 Accrued liabilities 20, 000 30, 000 Income taxes payable 45, 000 42, 000Equipment that had cost $40,000 and on which there was accumulated depreciation of $30,000 was sold during Year 2 for $18,000. The company declared and paid a cash dividend during Year 2. It did not retire any bonds or repurchase any of its own stock. Sam Conway, president of the company, considers $15,000 to be the minimum cash balance for operating purposes. As can be seen from the balance sheet data, only $4,000 in cash was available at the end of the current year. The sharp decline is puzzling to Mr. Conway, particularly because sales and prots are ata record high. Required: 1. Using the direct method, adjust the company's income statement to a cash basis for Year 2. 2. Using the data from [1) above and other data from the problem as needed, prepare a statement of cash flows for Year 2