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Joyner Companys income statement for Year 2 follows: Sales $ 705,000 Cost of goods sold 53,000 Gross margin 652,000 Selling and administrative expenses 217,000 Net

Joyner Companys income statement for Year 2 follows:

Sales $ 705,000
Cost of goods sold 53,000
Gross margin 652,000
Selling and administrative expenses 217,000
Net operating income 435,000
Nonoperating items:
Gain on sale of equipment 8,000
Income before taxes 443,000
Income taxes 132,900
Net income $ 310,100

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

Year 2 Year 1
Assets
Cash $ 264,400 $ 47,700
Accounts receivable 267,000 137,000
Inventory 320,000 285,000
Prepaid expenses 11,000 22,000
Total current assets 862,400 491,700
Property, plant, and equipment 629,000 516,000
Less accumulated depreciation 165,000 131,900
Net property, plant, and equipment 464,000 384,100
Loan to Hymans Company 46,000 0
Total assets $ 1,372,400 $ 875,800
Liabilities and Stockholders' Equity
Accounts payable $ 316,000 $ 253,000
Accrued liabilities 45,000 51,000
Income taxes payable 85,900 80,800
Total current liabilities 446,900 384,800
Bonds payable 206,000 106,000
Total liabilities 652,900 490,800
Common stock 344,000 286,000
Retained earnings 375,500 99,000
Total stockholders' equity 719,500 385,000
Total liabilities and stockholders' equity $ 1,372,400 $ 875,800

Equipment that had cost $30,900 and on which there was accumulated depreciation of $10,300 was sold during Year 2 for $28,600. 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.

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