Wiley Companys income statement for Year 2 follows: The companys selling and administrative expense for Year 2

Question:

Wiley Company’s income statement for Year 2 follows:

$150,000 Sales Cost of goods sold 90,000 Gross margin 60,000 Selling and administrative expenses 40,000 Income before ta

The company’s selling and administrative expense for Year 2 includes $7,500 of depreciation expense. Selected balance sheet accounts for Wiley at the end of Years 1 and 2 are as follows:

Required:

Using the direct method, convert the company’s income statement to a cash basis.
Assume that during Year 2 Wiley had a $9,000 gain on sale of investments and a $3,000 loss on the sale of equipment. Explain how these two transactions would affect your computations in (1) above.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...