Joyner Company's income statement for Year 2 follows: Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of equipment Income before taxes Income taxes Net income $ 714,000 226,000 488,000 150,900 337,100 9,000 346,100 138,440 $ 207,660 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 $ 171,860 225,000 320,000 8,500 725, 360 634,000 165, 300 468,700 49,000 $1,243,060 $ 76,600 126,000 272,000 17,000 491,600 506,000 132,000 374,000 $ 865,600 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Loan to Hymans Company Total assets Liabilities and Stockholders' Equity Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 320,000 43,000 84,100 447,100 191,000 638,100 339,000 265,960 604,960 $1,243,060 $ 267,000 52,000 81,600 400,600 100,000 500,600 272,000 93,000 365,000 $ 865,600 Equipment that had cost $30,300 and on which there was accumulated depreciation of $11,500 was sold during Year 2 for $27,800. 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. 207,660 Joyner Company Statement of Cash FlowsIndirect Method (partial) Net income Adjustments to convert net income to a cash basis: Depreciation Gain on sale of equipment Increase in accounts receivable Increase in inventory Decrease in prepaid expenses Increase in accounts payable Decrease in accrued liabilities Increase in income taxes payable 0 Net cash provided by operating activities 207,660 Joyner Company Statement of Cash Flows For Year 2 Operating activities: Investing activities: 0 Financing activities: 0 0 Beginning cash and cash equivalents Ending cash and cash equivalents $ 0