Wiley Companys income statement for Year 2 follows:

Sales	$	2,850
Cost of goods sold		1,100
Gross margin		1,750
Selling and administrative expenses		500
Income before taxes		1,250
Income taxes		500
Net income	$	750

The companys selling and administrative expense for Year 2 includes $80 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	$	195		$	245
Inventory	$	152		$	188
Prepaid expenses	$	35		$	29
Current Liabilities
Accounts payable	$	107		$	75
Accrued liabilities	$	14		$	21
Income taxes payable	$	120		$	75

Required:

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

2. Assume that during Year 2 Wiley had a $14,000 gain on sale of investments and a $7,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above?

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:
		0
		$0