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Wiley Company's income statement for Year 2 follows: $ 2,700 1,200 1,500 400 Sales Cost of goods sold Gross margin Selling and administrative expenses 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: Current Assets Accounts receivable Inventory Prepaid expenses Current Liabilities Accounts payable Accrued liabilities Income taxes payable Required 1 Required 2 Adjustments to a cash basis: Year 2 Adjustments to a cash basis: $200 $ 162 $37 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 $14,000 gain on sale of investments and a $6,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above? Selling and administrative expenses Adjustments to a cash basis: $ 121 $6 $ 104 Complete this question by entering your answers in the tabs below. Income taxes Adjustments to a cash basis: Year 1 Required 1 Required 2 $ 230 $192 $21 Using the direct method, convert the company's income statement to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) 1,100 440 $ 660 $ 70 $ 28 $85 Wiley Company Direct Method of Determining the Net Cash flows from Operating activities Assume that during Year 2 Wiley had a $14,000 gain on sale of investments and a $6,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above. ONo, gains and losses on income statement are ignored under direct method. ONo, gains and losses on income statement are considered under direct method. OYes, gains and losses on income statement are ignored under direct method. OYes, gains and losses on income statement are considered under direct method. < Required 1 Required 2 >

Wiley Company's income statement for Year 2 follows: $ 2,700 1,200 1,500 400 Sales Cost of goods sold Gross margin Selling and administrative expenses 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: Current Assets Accounts receivable Inventory Prepaid expenses Current Liabilities Accounts payable Accrued liabilities Income taxes payable Required 1 Required 2 Adjustments to a cash basis: Year 2 Adjustments to a cash basis: $200 $ 162 $37 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 $14,000 gain on sale of investments and a $6,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above? Selling and administrative expenses Adjustments to a cash basis: $ 121 $6 $ 104 Complete this question by entering your answers in the tabs below. Income taxes Adjustments to a cash basis: Year 1 Required 1 Required 2 $ 230 $192 $21 Using the direct method, convert the company's income statement to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) 1,100 440 $ 660 $ 70 $ 28 $85 Wiley Company Direct Method of Determining the Net Cash flows from Operating activities Assume that during Year 2 Wiley had a $14,000 gain on sale of investments and a $6,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above. ONo, gains and losses on income statement are ignored under direct method. ONo, gains and losses on income statement are considered under direct method. OYes, gains and losses on income statement are ignored under direct method. OYes, gains and losses on income statement are considered under direct method. < Required 1 Required 2 >

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Wiley Company's income statement for Year 2 follows: $ 2,700 1,200 Sales Cost of goods sold Gross margin Selling and administrative expenses Income before taxes Income taxes Net income Current Assets Accounts receivable Inventory Prepaid expenses Current Liabilities Accounts payable Accrued liabilities Income taxes payable Required 1 Required 2 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: Adjustments to a cash basis: Year 2 Adjustments to a cash basis: $ 200 $ 162 $37 Selling and administrative expenses Adjustments to a cash basis: **** $ 121 $ 104 Income taxes Adjustments to a cash basis: Required 1 Required 2 Year 1 $ 230 $192 $ 21 1,500 $70 $28 $ 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 $14,000 gain on sale of investments and a $6,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above? 400 Complete this question by entering your answers in the tabs below. 1,100 440 Using the direct method, convert the company's income statement to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) $ 660 Wiley Company Direct Method of Determining the Net Cash flows from Operating activities Assume that during Year 2 Wiley had a $14,000 gain on sale of investments and a $6,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above. ONo, gains and losses on income statement are ignored under direct method. ONo, gains and losses on income statement are considered under direct method. OYes, gains and losses on income statement are ignored under direct method. OYes, gains and losses on income statement are considered under direct method. < Required 1 Required 2 >
Transcribed Image Text:Wiley Company's income statement for Year 2 follows: $ 2,700 1,200 Sales Cost of goods sold Gross margin Selling and administrative expenses Income before taxes Income taxes Net income Current Assets Accounts receivable Inventory Prepaid expenses Current Liabilities Accounts payable Accrued liabilities Income taxes payable Required 1 Required 2 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: Adjustments to a cash basis: Year 2 Adjustments to a cash basis: $ 200 $ 162 $37 Selling and administrative expenses Adjustments to a cash basis: **** $ 121 $ 104 Income taxes Adjustments to a cash basis: Required 1 Required 2 Year 1 $ 230 $192 $ 21 1,500 $70 $28 $ 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 $14,000 gain on sale of investments and a $6,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above? 400 Complete this question by entering your answers in the tabs below. 1,100 440 Using the direct method, convert the company's income statement to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) $ 660 Wiley Company Direct Method of Determining the Net Cash flows from Operating activities Assume that during Year 2 Wiley had a $14,000 gain on sale of investments and a $6,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above. ONo, gains and losses on income statement are ignored under direct method. ONo, gains and losses on income statement are considered under direct method. OYes, gains and losses on income statement are ignored under direct method. OYes, gains and losses on income statement are considered under direct method. < Required 1 Required 2 >
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