Joyner Companys income statement for Year 2 follows:

Joyner Companys Income Statement
Sales	$	701,000
Cost of goods sold		340,000
Gross margin		361,000
Selling and administrative expenses		216,000
Net operating income		145,000
Gain on sale of equipment		9,000
Income before taxes		154,000
Income taxes		61,600
Net income	$	92,400

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	$	24,600	$	58,000
Accounts receivable		279,000		140,000
Inventory		319,000		282,000
Prepaid expenses		10,000		20,000
Total current assets		632,600		500,000
Property, plant, and equipment		631,000		503,000
Less accumulated depreciation		165,300		130,800
Net property, plant, and equipment		465,700		372,200
Loan to Hymans Company		45,000		0
Total assets	$	1,143,300	$	872,200
Liabilities and Stockholders' Equity
Accounts payable		318,000		259,000
Accrued liabilities		43,000		52,000
Income taxes payable		85,400		81,200
Total current liabilities		446,400		392,200
Bonds payable		201,000		101,000
Total liabilities		647,400		493,200
Common stock		347,000		289,000
Retained earnings		148,900		90,000
Total stockholders' equity		495,900		379,000
Total liabilities and stockholders' equity	$	1,143,300	$	872,200

Equipment that had cost $31,400 and on which there was accumulated depreciation of $10,200 was sold during Year 2 for $30,200. 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 $28,600 to be the minimum cash balance for operating purposes. As can be seen from the balance sheet data, only $24,600 in cash was available at the end of the current year. The sharp decline is puzzling to Mr. Conway, particularly because sales and profits are at a record high.

Required:
1.	Using the direct method, adjust the companys income statement to a cash basis for Year 2. (Adjustment amounts that are to be deducted should be indicated with a minus sign.)

2.	Using the data from (1) above and other data from the problem as needed, prepare a statement of cash flows for Year 2. (Cash outflows and amounts to be deducted should be indicated with a minus sign.)