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 $ 2,300 1,100 1,200 500 700 280 420 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 $190 $245 Inventory $158 $186 Prepaid expenses $36 $ 25 Current Liabilities Accounts payable $106 $ 80 Accrued liabilities $ 6 $ 29 Income taxes payable $106 $ 85 LUETUNE LODIILUN Accounts payable Accrued liabilities Income taxes payable $106 $ 6 $106 $ 80 $ 29 $ 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 $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