The following changes took place last year in Pavolik Company's balance sheet accounts: Asset and Contra-Asset Accounts Cash Accounts receivable Inventory Prepaid expenses Long-term investments Property, plant, and equipment Accumulated depreciation $ 11 D $ 15 I $ 40 D $ 10 I $ 12 D $ 260 I $ 55 I Liabilities and Stockholders' Equity Accounts Accounts payable $ 35 I Accrued liabilities $ 15 D Income taxes payable $ 20 I Bonds payable $ 132 I Common stock $ 60 D Retained earnings $ 55 I D = Decrease; I = Increase. Long-term investments that cost the company $12 were sold during the year for $28 and land that cost $27 was sold for $15. In addition, the company declared and paid $9 in cash dividends during the year. Besides the sale of land, no other sales or retirements of plant and equipment took place during the year. Pavolik did not retire any bonds during the year or issue any new common stock. The company's income statement for the year follows: $ 750 320 430 330 100 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Loss on sale of land Gain on sale of investments Income before taxes Income taxes Net income $ (12) 16 104 40 $ 64 The company's beginning cash balance was $110 and its ending balance was $99. Required: 1. Use the indirect method to determine the net cash provided by operating activities for the year. 2. Prepare a statement of cash flows for the year. Wiley Company's income statement for Year 2 follows: Sales Cost of goods sold Gross margin Selling and administrative expenses Income before taxes Income taxes Net income $ 2,200 - 900 1,300 400 900 360 $ 540 The company's selling and administrative expense for Year 2 includes $78 of depreciation expense. Selected balance sheet accounts for Wiley at the end of Years 1 and 2 are as follows: Year 2 Year 1 $200 $160 $ 35 $230 $190 $ 21 Current Assets Accounts receivable Inventory Prepaid expenses Current Liabilities Accounts payable Accrued liabilities Income taxes payable $123 $ 11 $118 $ 77 $ 23 $ 80 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 $10,000 gain on sale of investments and a $5,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above