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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
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 $ 2,950 1,300 1,650 300 1,350 540 $ 810 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 Current Assets Accounts receivable $210 $235 Inventory $156 $190 Prepaid expenses $ 41 $ 20 Current Liabilities Accounts payable $110 $ 81 Accrued liabilities $ 6 $ 27 Income taxes payable $108 $ 85 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 $5,000 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 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: < Required 1 0 0 0 0 $ 0 Required 2 >
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