Exercise 13A-2 (Algo) Net Cash Provided by Operating Activities [LO13-4] Wiley Company's income statement for Year 2 follows: Sales Cost of goods sold Gross margin Selling and administrative expenses $ 2,550 1,300 1,250 400 850 340 $ 510 Income before taxes Income taxes Net income The company's selling and administrative expense for Year 2 includes $74 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 $ 205 $ 255 Inventory $ 164 $ 186 Prepaid expenses $ 37 $ 22 Current Liabilities Accounts payable $ 104 $ 77 Accrued liabilities $ 9 118 $ 27 $ 85 Income taxes payable 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 $10,000 gain on sale of investments and a $6,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above?