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Joyner Company’s income statement for Year 2 follows:

Sales	$	719,000
Cost of goods sold		177,000
Gross margin		542,000
Selling and administrative expenses		216,000
Net operating income		326,000
Nonoperating items:
Gain on sale of equipment		6,000
Income before taxes		332,000
Income taxes		132,800
Net income	$	199,200

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

	Year 2			Year 1
Assets
Cash and cash equivalents	$	137,800		$	32,000
Accounts receivable		278,000			145,000
Inventory		319,000			285,000
Prepaid expenses		9,000			18,000
Total current assets		743,800			480,000
Property, plant, and equipment		621,000			519,000
Less accumulated depreciation		165,000			131,500
Net property, plant, and equipment		456,000			387,500
Loan to Hymans Company		48,000			0
Total assets	$	1,247,800		$	867,500
Liabilities and Stockholders' Equity
Accounts payable	$	317,000		$	262,000
Accrued liabilities		47,000			52,000
Income taxes payable		84,200			80,500
Total current liabilities		448,200			394,500
Bonds payable		203,000			103,000
Total liabilities		651,200			497,500
Common stock		334,000			275,000
Retained earnings		262,600			95,000
Total stockholders' equity		596,600			370,000
Total liabilities and stockholders' equity	$	1,247,800		$	867,500

Equipment that had cost $30,500 and on which there wasaccumulated depreciation of $11,400 was sold during Year 2 for$25,100. The company declared and paid a cash dividend during Year2. It did not retire any bonds or repurchase any of its ownstock.

Required:

1. Using the indirect method, compute the net cash providedby/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.

Using the indirect method, compute the net cash provided by/usedin operating activities for Year 2. (List any deduction in cashoutflows as negative amounts.)

	Joyner Company Statement of Cash Flows—Indirect Method(partial) Net income

Prepare a statement of cash flows for Year 2. (List anydeduction in cash and cash outflows as negative amounts.)

	Joyner Company Statement of Cash Flows For Year 2 Operating activities: Investing activities: 0 Financing activities: 0 0 Beginning cash and cashequivalents Ending cash and cashequivalents $0

compute the free cash flow for Year 2. (Negative amount shouldbe indicated by a minus sign.)

	Free cash flow