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 $ 3,00 1,400 1,600 400 1,200 480 $ 720 The company's selling and administrative expense for Year 2 includes $72 of depreciation expense. Selected balance sheet accounts for Wiley at the end of Years 1 and 2 are as follows: Year 2 Year 1 Current Assets Accounts receivable 5215 $240 Inventory 5164 Prepaid expenses 5.37 Current Liabilities $ 24 Accounts payable $105 Accrued liabilities 5.77 $ 12 Income taxes payable 5.23 5122 $65 $298 Required: 1. Using the direct method, convert the company's income statement to a cash basis 2. Assume that during Year 2 Wiey had a $12,000 gain on sale of investments and a $6,000 loss on the sale of equipment Would Wiley Company Direct Method of Determining the Net Cash flows from Operating activities Adjustments to a cash basis: 0 Adjustments to a cash basis: 0 Selling and administrative expenses Adjustments to a cash basis: 0 Income taxes Adjustments to a cash basis- 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 $6,000 loss on the sale of equipment Would these transactions affect the computation in (1) above? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assume that during Year 2 Wiley had a $12,000 gain on sale of investments and a $6,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above. No, gains and losses on income statement are ignored under direct method No, gains and losses on income statement are considered under direct method Yes, gains and fosses on income statement are ignored under direct method Yes, gains and losses on income statement are considered under direct method