Joyner Company's income statement for Year 2 follows: $ 709,000 190,000 519,000 151,700 367, 300 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items : Gain on sale of equipment Income before taxes Income taxes Net income 9,000 376,300 112,890 $ 263,410 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 252,710 222,000 319,000 10,000 803, 710 626,000 166,100 459,900 47,000 $1,310,610 $ 68,300 133,000 285,000 20,000 506,300 504,000 131,500 372,500 0 $878,800 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Loan to Hymans Company Total assets Liabilities and Stockholders' Equity Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 314,000 46,000 85,300 445, 300 205,000 650, 300 334,000 326,310 660, 310 $1,310,610 $ 253,000 51,000 80,800 384,800 109,000 493,800 289,000 96,000 385,000 $878,800 Equipment that had cost $31,200 and on which there was accumulated depreciation of $10,100 was sold during Year 2 for $30,100. 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. 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.) $ 263,410 Joyner Company Statement of Cash FlowsIndirect Method (partial) Net income Adjustments to convert net income to a cash basis: Depreciation $ 44,700 Gain on sale of equipment (9,000) Increase in accounts receivable (89,000) Increase in inventory (34,000)| Decrease in prepaid expenses 10,000 Increase in accounts payable (61,000) Decrease in accrued liabilities 5,000 Increase in income taxes payable (4,500) (137,800) $ 125,610 Net cash provided by operating activities Joyner Company Statement of Cash Flows For Year 2 Operating activities: Net cash provided by operating activities Investing activities: Additions to property, plant, and equipment $ Gain on sale of equipment Loan to Hymans Company 125,610 (10,000) 45,500 35,500 Net cash used in investing activities Financing activities: Issuance of bonds payable Issuance of common stock Cash dividends paid 0 161, 110 Net cash provided by financing activities Net decrease in cash Beginning cash and cash equivalents Ending cash and cash equivalents $ 161,110 Compute the free cash flow for Year 2. Free cash flow