wiley company s income statement for year 2 follows 284352

Wiley Company’s income statement for Year 2 follows:



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.