Joyner Company’s income statement for Year 2 follows:

Sales	$	712,000
Cost of goods sold		91,000
Gross margin		621,000
Selling and administrative expenses		216,000
Net operating income		405,000
Nonoperating items:
Gain on sale of equipment		6,000
Income before taxes		411,000
Income taxes		123,300
Net income	$	287,700

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

	Year 2			Year 1
Assets
Cash	$	242,200		$	92,500
Accounts receivable		269,000			114,000
Inventory		320,000			271,000
Prepaid expenses		10,000			20,000
Total current assets		841,200			497,500
Property, plant, and equipment		635,000			518,000
Less accumulated depreciation		166,800			131,800
Net property, plant, and equipment		468,200			386,200
Loan to Hymans Company		40,000			0
Total assets	$	1,349,400		$	883,700
Liabilities and Stockholders' Equity
Accounts payable	$	320,000		$	260,000
Accrued liabilities		46,000			53,000
Income taxes payable		84,700			81,700
Total current liabilities		450,700			394,700
Bonds payable		208,000			115,000
Total liabilities		658,700			509,700
Common stock		339,000			276,000
Retained earnings		351,700			98,000
Total stockholders' equity		690,700			374,000
Total liabilities and stockholders' equity	$	1,349,400		$	883,700

Equipment that had cost $30,800 and on which there was accumulated depreciation of $11,300 was sold during Year 2 for $25,500. 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.