Joyner Companys income statement for Year 2 follows:

Sales	$	707,000
Cost of goods sold		287,000
Gross margin		420,000
Selling and administrative expenses		151,000
Net operating income		269,000
Nonoperating items:
Gain on sale of equipment		7,000
Income before taxes		276,000
Income taxes		82,800
Net income	$	193,200

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

	Year 2			Year 1
Assets
Cash and cash equivalents	$	166,100		$	87,900
Accounts receivable		226,000			120,000
Inventory		319,000			288,000
Prepaid expenses		10,500			21,000
Total current assets		721,600			516,900
Property, plant, and equipment		627,000			508,000
Less accumulated depreciation		165,300			131,600
Net property, plant, and equipment		461,700			376,400
Loan to Hymans Company		40,000			0
Total assets	$	1,223,300		$	893,300
Liabilities and Stockholders' Equity
Accounts payable	$	320,000		$	266,000
Accrued liabilities		42,000			60,000
Income taxes payable		84,500			80,300
Total current liabilities		446,500			406,300
Bonds payable		194,000			117,000
Total liabilities		640,500			523,300
Common stock		330,000			278,000
Retained earnings		252,800			92,000
Total stockholders' equity		582,800			370,000
Total liabilities and stockholders' equity	$	1,223,300		$	893,300

Equipment that had cost $30,700 and on which there was accumulated depreciation of $11,300 was sold during Year 2 for $26,400. 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.

Complete this question by entering your answers in the tabs below.

• 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 FlowsIndirect Method (partial)
Net income
Adjustments to convert sales to a cash basis:
Depreciation
Gain on sale of equipment
		0
		$0

• Prepare a statement of cash flows for Year 2. (List any deduction in cash and cash outflows as negative amounts.)

  Joyner Company
  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

Complete this question by entering your answers in the tabs below.

• 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