Wiley Company's Income statement for Year 2 follows: Sales Cost of goods sold $ 2,550 1,000 Gross margin 1,550 Selling and administrative expenses Income before taxes 400 1,150 460 $ 690 Income taxes Net income 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: Current Assets Accounts receivable Inventory Prepaid expenses Current Liabilition Accounts payable Accrued liabilities Income taxes payable Required: Year 2 Year 1 $ 190 $166 $42 $ 250 $104 $ 21 $100 $74 $ 12 $112 $23 $75 1. Using the direct method, convert the company's income statement to a cash basis. 2. Assume that during Year 2 Wiley had a $14,000 gain on sale of investments and a $5,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above?