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Sales	$	705,000
Cost of goods sold		133,000
Gross margin		572,000
Selling and administrative expenses		150,600
Net operating income		421,400
Nonoperating items:
Gain on sale of equipment		8,000
Income before taxes		429,400
Income taxes		171,760
Net income	$	257,640

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

	Year 2			Year 1
Assets
Cash and cash equivalents	$	235,440		$	64,300
Accounts receivable		227,000			139,000
Inventory		320,000			277,000
Prepaid expenses		8,500			17,000
Total current assets		790,940			497,300
Property, plant, and equipment		636,000			512,000
Less accumulated depreciation		166,400			130,300
Net property, plant, and equipment		469,600			381,700
Loan to Hymans Company		41,000			0
Total assets	$	1,301,540		$	879,000
Liabilities and Stockholders' Equity
Accounts payable	$	317,000		$	257,000
Accrued liabilities		45,000			54,000
Income taxes payable		85,100			81,000
Total current liabilities		447,100			392,000
Bonds payable		194,000			118,000
Total liabilities		641,100			510,000
Common stock		339,000			274,000
Retained earnings		321,440			95,000
Total stockholders' equity		660,440			369,000
Total liabilities and stockholders' equity	$	1,301,540		$	879,000

Equipment that had cost $31,600 and on which there was accumulated depreciation of $11,400 was sold during Year 2 for $28,200. 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.

• Required 1
• Required 2
• Required 3

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

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

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