Problem 14-10 Prepare a Statement of Cash Flows; Free Cash Flow [LO14-1, LO14-2, LO14-3]

Joyner Companys income statement for Year 2 follows:

Sales	$	709,000
Cost of goods sold		342,000
Gross margin		367,000
Selling and administrative expenses		217,000
Net operating income		150,000
Gain on sale of equipment		9,000
Income before taxes		159,000
Income taxes		63,600
Net income	$	95,400

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

	Year 2		Year 1
Assets
Cash	$	15,700	$	48,400
Accounts receivable		268,000		132,000
Inventory		319,000		289,000
Prepaid expenses		9,500		19,000
Total current assets		612,200		488,400
Property, plant, and equipment		631,000		518,000
Less accumulated depreciation		167,000		131,700
Net property, plant, and equipment		464,000		386,300
Loan to Hymans Company		49,000		0
Total assets	$	1,125,200	$	874,700
Liabilities and Stockholders' Equity
Accounts payable	$	310,000	$	261,000
Accrued liabilities		40,000		56,000
Income taxes payable		86,000		81,700
Total current liabilities		436,000		398,700
Bonds payable		194,000		106,000
Total liabilities		630,000		504,700
Common stock		339,000		276,000
Retained earnings		156,200		94,000
Total stockholders' equity		495,200		370,000
Total liabilities and stockholders' equity	$	1,125,200	$	874,700

Equipment that had cost $31,700 and on which there was accumulated depreciation of $10,900 was sold during Year 2 for $29,800. 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 for operating activities for Year 2. (Negative amount should be indicated by a minus sign.)

Joyner Company
Statement of Cash Flows
For Year 2
Operating activities:
Adjustments to convert net income to cash basis:
Investing activities:
Financing activities:
Beginning cash and cash equivalents
Ending cash and cash equivalents

Compute the free cash flow for Year 2. (Negative amount should be indicated by a minus sign.)