Joyner Companys income statement for Year 2 follows:

Sales	$	717,000
Cost of goods sold		159,000
Gross margin		558,000
Selling and administrative expenses		150,100
Net operating income		407,900
Nonoperating items:
Gain on sale of equipment		9,000
Income before taxes		416,900
Income taxes		125,070
Net income	$	291,830

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

	Year 2			Year 1
Assets
Cash and cash equivalents	$	258,330		$	55,100
Accounts receivable		229,000			150,000
Inventory		319,000			273,000
Prepaid expenses		10,500			21,000
Total current assets		816,830			499,100
Property, plant, and equipment		633,000			512,000
Less accumulated depreciation		165,600			130,500
Net property, plant, and equipment		467,400			381,500
Loan to Hymans Company		47,000			0
Total assets	$	1,331,230		$	880,600
Liabilities and Stockholders' Equity
Accounts payable	$	310,000		$	263,000
Accrued liabilities		47,000			57,000
Income taxes payable		84,900			81,600
Total current liabilities		441,900			401,600
Bonds payable		191,000			109,000
Total liabilities		632,900			510,600
Common stock		344,000			273,000
Retained earnings		354,330			97,000
Total stockholders' equity		698,330			370,000
Total liabilities and stockholders' equity	$	1,331,230		$	880,600

Equipment that had cost $30,100 and on which there was accumulated depreciation of $11,700 was sold during Year 2 for $27,400. 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. (List any deduction in cash outflows as negative amounts.)

Joyner Company
Statement of Cash FlowsIndirect Method (partial)

2. Prepare a statement of cash flows for Year 2.

Joyner Company
Statement of Cash Flows
For Year 2
Operating activities:
Investing activities:
Financing activities:
Beginning cash and cash equivalents
Ending cash and cash equivalents

3. Compute the free cash flow for Year 2.