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Joyner Companys income statement for Year 2 follows: Sales $ 710,000 Cost of goods sold 387,000 Gross margin 323,000 Selling and administrative expenses 150,400 Net

Joyner Companys income statement for Year 2 follows:

Sales $ 710,000
Cost of goods sold 387,000
Gross margin 323,000
Selling and administrative expenses 150,400
Net operating income 172,600
Nonoperating items:
Gain on sale of equipment 7,000
Income before taxes 179,600
Income taxes 53,880
Net income $ 125,720

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

Year 2 Year 1
Assets
Cash and cash equivalents $ 115,620 $ 45,300
Accounts receivable 229,000 139,000
Inventory 319,000 289,000
Prepaid expenses 10,500 21,000
Total current assets 674,120 494,300
Property, plant, and equipment 625,000 515,000
Less accumulated depreciation 166,900 131,300
Net property, plant, and equipment 458,100 383,700
Loan to Hymans Company 41,000 0
Total assets $ 1,173,220 $ 878,000
Liabilities and Stockholders' Equity
Accounts payable $ 311,000 $ 263,000
Accrued liabilities 47,000 57,000
Income taxes payable 85,700 81,000
Total current liabilities 443,700 401,000
Bonds payable 196,000 112,000
Total liabilities 639,700 513,000
Common stock 347,000 273,000
Retained earnings 186,520 92,000
Total stockholders' equity 533,520 365,000
Total liabilities and stockholders' equity $ 1,173,220 $ 878,000

Equipment that had cost $32,000 and on which there was accumulated depreciation of $11,600 was sold during Year 2 for $27,400. 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.

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