Joyner Companys income statement for Year 2 follows:

Sales	$ 703,000
Cost of goods sold	91,000
Gross margin	612,000
Selling and administrative expenses	150,200
Net operating income	461,800
Nonoperating items:
Gain on sale of equipment	8,000
Income before taxes	469,800
Income taxes	187,920
Net income	$ 281,880

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

	Year 2	Year 1
Assets
Cash	$ 277,880	$ 110,800
Accounts receivable	221,000	112,000
Inventory	318,000	270,000
Prepaid expenses	8,500	17,000
Total current assets	825,380	509,800
Property, plant, and equipment	631,000	506,000
Less accumulated depreciation	165,300	130,900
Net property, plant, and equipment	465,700	375,100
Loan to Hymans Company	40,000	0
Total assets	$ 1,331,080	$ 884,900
Liabilities and Stockholders' Equity
Accounts payable	$ 315,000	$ 254,000
Accrued liabilities	45,000	53,000
Income taxes payable	84,300	81,900
Total current liabilities	444,300	388,900
Bonds payable	205,000	119,000
Total liabilities	649,300	507,900
Common stock	335,000	281,000
Retained earnings	346,780	96,000
Total stockholders' equity	681,780	377,000
Total liabilities and stockholders' equity	$ 1,331,080	$ 884,900

Equipment that had cost $31,200 and on which there was accumulated depreciation of $10,700 was sold during Year 2 for $28,500. 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.