Sales $710,000 Cost of goods sold 182,000 Gross margin 528,000 Selling and administrative expenses 151,900 Net operating income 376,100 Nonoperating items: Gain on sale of equipment 7,000 Income before taxes 383,100 Income taxes Net income 153,240 $229,860 Its balance sheet amounts at the end of Years 1 and 2 are as follows: 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 Year 2 Year 1 $ 211,860 $ 90,900 252,000 111,000 319,000 279,000 9,500 19,000 792,360 499,900 621,000 511,000 165,800 130,100 455,200 380,900 41,000 $1,288,560 $880,800 $ 317,000 $254,000 46,000 53,000 85,800 81,800 448,800 388,800 207,000 112,000 Total current liabilities Bonds payable Total liabilities 655,800 500,800 Common stock 347,000 290,000 Retained earnings 285,760 90,000 Total stockholders' equity 632,760 380,000 Total liabilities and stockholders' equity $1,288,560 $880,800 Equipment that had cost $31,700 and on which there was accumulated depreciation of $10,800 was sold during Year 2 for $27,900. 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.