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 $ 719,000 203,000 516,000 216,000 300,000 7,000 307,000 122,800 $184,200 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 Total current liabilities Bonds payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Year 2 Year 1 $ 140,700 265,000 319,000 8,500 $ 90,300 133,000 275,000 17,000 733,200 515,300 624,000 511,000 166,000 130,500 458,000 380,500 47,000 0 $1,238,200 $895,800 $ 314,000 45,000 $265,000 53,000 84,100 81,800 443,100 399,800 204,000 111,000 647,100 510,800 345,000 290,000 246,100 95,000 591,100 385,000 $1,238,200 $895,800 Equipment that had cost $30,600 and on which there was accumulated depreciation of $10,800 was sold during Year 2 for $26,800. 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.