Joyner Company's income statement for Year 2 follows:

Sales $710,000

Cost of goods sold 84,000

Gross margin 626,000

Selling and administrative expenses 150,900

Net operating income 475,100

Nonoperating items:

Gain on sale of equipment 6,000

Income before taxes 481,100

Income taxes 144,330

Net income $336,770

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

Year 2 Year 1

Assets

Cashand cash equivalents $320,870 $69,800

Accounts receivable 227,000 121,000

Inventory 318,000 282,000

Prepaid expenses 8,500 17,000

Total current assets 874,370 489,800

Property, plant, and equipment 636,000 512,000

Less accumulated depreciation 165,700 130,300

Net property, plant, and equipment 470,300 381,700

Loan to Hymans Company 42,000 0

Total assets $1,386,670 $871,500

Liabilities and Stockholders' Equity

Accounts payable $318,000 $257,000

Accrued liabilities 48,000 53,000

Income taxes payable 85,500 81,500

Total current liabilities 451,500 391,500

Bonds payable 199,000 111,000

Total liabilities 650,500 502,500

Common stock 333,000 271,000

Retained earnings 403,170 98,000

Total stockholders' equity 736,170 369,000

Total liabilities and stockholders' equity $1,386,670 $871,500

Equipment that had cost $30,800 and on which there was accumulated depreciation of $10,500 was sold during Year 2 for $26,300. 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. Write the statement of cash flows for Year 2.

3. Compute the free cash flow for Year 2.