Joyner Companys income statement for Year 2 follows:

Sales	$ 707,000
Cost of goods sold	150,000
Gross margin	557,000
Selling and administrative expenses	151,900
Net operating income	405,100
Nonoperating items:
Gain on sale of equipment	5,000
Income before taxes	410,100
Income taxes	164,040
Net income	$ 246,060

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

	Year 2	Year 1
Assets
Cash	$ 232,060	$ 56,600
Accounts receivable	221,000	123,000
Inventory	320,000	288,000
Prepaid expenses	9,000	18,000
Total current assets	782,060	485,600
Property, plant, and equipment	625,000	506,000
Less accumulated depreciation	165,200	131,800
Net property, plant, and equipment	459,800	374,200
Loan to Hymans Company	41,000	0
Total assets	$ 1,282,860	$ 859,800
Liabilities and Stockholders' Equity
Accounts payable	$ 312,000	$ 259,000
Accrued liabilities	45,000	51,000
Income taxes payable	84,700	81,800
Total current liabilities	441,700	391,800
Bonds payable	190,000	107,000
Total liabilities	631,700	498,800
Common stock	348,000	270,000
Retained earnings	303,160	91,000
Total stockholders' equity	651,160	361,000
Total liabilities and stockholders' equity	$ 1,282,860	$ 859,800

Equipment that had cost $30,800 and on which there was accumulated depreciation of $10,100 was sold during Year 2 for $25,700. 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.