Joyner Companys income statement for Year 2 follows:

Sales	$	708,000
Cost of goods sold		143,000
Gross margin		565,000
Selling and administrative expenses		151,600
Net operating income		413,400
Nonoperating items:
Gain on sale of equipment		8,000
Income before taxes		421,400
Income taxes		126,420
Net income	$	294,980

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

	Year 2			Year 1
Assets
Cash and cash equivalents	$	290,880		$	90,500
Accounts receivable		224,000			120,000
Inventory		320,000			270,000
Prepaid expenses		8,000			16,000
Total current assets		842,880			496,500
Property, plant, and equipment		622,000			516,000
Less accumulated depreciation		166,900			131,800
Net property, plant, and equipment		455,100			384,200
Loan to Hymans Company		47,000			0
Total assets	$	1,344,980		$	880,700
Liabilities and Stockholders' Equity
Accounts payable	$	318,000		$	257,000
Accrued liabilities		49,000			52,000
Income taxes payable		85,400			81,700
Total current liabilities		452,400			390,700
Bonds payable		203,000			116,000
Total liabilities		655,400			506,700
Common stock		336,000			283,000
Retained earnings		353,580			91,000
Total stockholders' equity		689,580			374,000
Total liabilities and stockholders' equity	$	1,344,980		$	880,700

Equipment that had cost $32,000 and on which there was accumulated depreciation of $10,200 was sold during Year 2 for $29,800. 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.