Joyner Companys income statement for Year 2 follows:

Sales	$	702,000
Cost of goods sold		119,000
Gross margin		583,000
Selling and administrative expenses		150,600
Net operating income		432,400
Nonoperating items:
Gain on sale of equipment		6,000
Income before taxes		438,400
Income taxes		175,360
Net income	$	263,040

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

	Year 2			Year 1
Assets
Cash and cash equivalents	$	250,040		$	71,000
Accounts receivable		225,000			119,000
Inventory		319,000			284,000
Prepaid expenses		10,000			20,000
Total current assets		804,040			494,000
Property, plant, and equipment		623,000			516,000
Less accumulated depreciation		166,800			131,600
Net property, plant, and equipment		456,200			384,400
Loan to Hymans Company		41,000			0
Total assets	$	1,301,240		$	878,400
Liabilities and Stockholders' Equity
Accounts payable	$	312,000		$	269,000
Accrued liabilities		45,000			51,000
Income taxes payable		84,100			80,400
Total current liabilities		441,100			400,400
Bonds payable		203,000			105,000
Total liabilities		644,100			505,400
Common stock		333,000			278,000
Retained earnings		324,140			95,000
Total stockholders' equity		657,140			373,000
Total liabilities and stockholders' equity	$	1,301,240		$	878,400

Equipment that had cost $30,600 and on which there was accumulated depreciation of $11,500 was sold during Year 2 for $25,100. 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.

1

	Joyner Company Statement of Cash FlowsIndirect Method (partial) 0 $0

2

	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

3

	Free cash flow