Joyner Companys income statement for Year 2 follows:

Sales	$	711,000
Cost of goods sold		364,000
Gross margin		347,000
Selling and administrative expenses		151,000
Net operating income		196,000
Nonoperating items:
Gain on sale of equipment		7,000
Income before taxes		203,000
Income taxes		60,900
Net income	$	142,100

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

Equipment that had cost $31,900 and on which there was accumulated depreciation of $11,800 was sold during Year 2 for $27,100. 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.

Year 2 Year 1 $ 143,500 225,000 319,000 8,500 696,000 620,000 166,000 454,000 44,000 $1,194,000 $ 71,900 143,000 270,000 17,000 501,900 515,000 130, 600 384,400 0 $ 886,300 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 $ 311,000 46,000 85,400 442,400 208,000 650,400 342,000 201,600 543,600 $1,194,000 $ 257,000 59,000 80,300 396,300 111,000 507,300 285,000 94,000 379,000 $ 886,300