1. Using the direct method, convert the companys income statement to a cash basis.

2. Assume that during Year 2 Wiley had a $12,000 gain on sale of investments and a $4,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above?

Wiley Company's income statement for Year 2 follows: The company's selling and administrative expense for Year 2 includes $76 of depreciation expense. Selected balance sheet accounts for Wiley at the end of Years 1 and 2 are as follows: Required: 1. Using the direct method, convert the company's income statement to a cash basis. 2. Assume that during Year 2 Wiley had a $12,000 gain on sale of investments and a $4,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above