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oyner Companys income statement for Year 2 follows: Sales $ 718,000 Cost of goods sold 50,000 Gross margin 668,000 Selling and administrative expenses 217,000 Net

oyner Companys income statement for Year 2 follows:

Sales $ 718,000
Cost of goods sold 50,000
Gross margin 668,000
Selling and administrative expenses 217,000
Net operating income 451,000
Nonoperating items:
Gain on sale of equipment 5,000
Income before taxes 456,000
Income taxes 136,800
Net income $ 319,200

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

Year 2 Year 1
Assets
Cash $ 254,300 $ 55,900
Accounts receivable 252,000 118,000
Inventory 318,000 286,000
Prepaid expenses 10,000 20,000
Total current assets 834,300 479,900
Property, plant, and equipment 627,000 517,000
Less accumulated depreciation 166,600 131,300
Net property, plant, and equipment 460,400 385,700
Loan to Hymans Company 47,000 0
Total assets $ 1,341,700 $ 865,600
Liabilities and Stockholders' Equity
Accounts payable $ 310,000 $ 255,000
Accrued liabilities 42,000 52,000
Income taxes payable 84,900 81,600
Total current liabilities 436,900 388,600
Bonds payable 193,000 108,000
Total liabilities 629,900 496,600
Common stock 335,000 279,000
Retained earnings 376,800 90,000
Total stockholders' equity 711,800 369,000
Total liabilities and stockholders' equity $ 1,341,700 $ 865,600

Equipment that had cost $31,800 and on which there was accumulated depreciation of $10,100 was sold during Year 2 for $26,700. 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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