Wiley Company's income statement for Year 2 follows: Sales $2,200 Cost of goods sold 1,300 Gross margin 900 Selling and administrative expenses 500 Income before taxes 400 Income taxes 160 Net income $ 240 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 $195 $154 $ 37 $245 $184 $ 24 Current Assets Accounts receivable Inventory Prepaid expenses Current Liabilities Accounts payable Accrued liabilities Income taxes payable $112 $ 12 $128 $ 83 $ 23 $ 65 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 $15.000 gain on sale of investments and a $4.000 loss on the sale of equipment. Would these transactions affect the computation in (1) above? Using the direct method, convert the company's income statement to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) Wiley Company Direct Method of Determining the Net Cash flows from Operating activities Adjustments to a cash basis: Adjustments to a cash basis: Selling and administrative expenses Adjustments to a cash basis: Income taxes Adjustments to a cash basis