Joyner Companys income statement for Year 2 follows:

Sales	$	709,000
Cost of goods sold		160,000
Gross margin		549,000
Selling and administrative expenses		150,800
Net operating income		398,200
Nonoperating items:
Gain on sale of equipment		8,000
Income before taxes		406,200
Income taxes		162,480
Net income	$	243,720

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

Year 2 Year 1Assets Cash$224,020 $74,800Accounts receivable 221,000 127,000Inventory 319,000 287,000Prepaid expenses 10,000 20,000Total current assets 774,020 508,800Property, plant, and equipment 632,000 500,000Less accumulated depreciation 166,100 131,400Net property, plant, and equipment 465,900 368,600Loan to Hymans Company 45,000 0Total assets$1,284,920 $877,400Liabilities and Stockholders' Equity Accounts payable$319,000 $263,000Accrued liabilities 45,000 52,000Income taxes payable 84,400 81,400Total current liabilities 448,400 396,400Bonds payable 198,000 105,000Total liabilities 646,400 501,400Common stock 332,000 281,000Retained earnings 306,520 95,000Total stockholders' equity 638,520 376,000Total liabilities and stockholders' equity$1,284,920 $877,400

Equipment that had cost $30,000 and on which there was accumulated depreciation of $10,700 was sold during Year 2 for $27,300. 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. Prepare a statement of cash flows for Year 2.

3. Compute the free cash flow for Year 2.