Wiley Company's income statement for Year 2 follows: Sales $ 2,800 1,100 Cost of goods sold Gross margin 1,700 Selling and administrative expenses 400 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 Year 2 $ 210 $ 166 $ 34 $ 114 $5 $ 118 1,300 520 $ 780 Year 1 $ 255 $ 198 $ 26 $85 $ 30 $ 70 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 $13,000 gain on sale of investments and a $4,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above?

Wiley Company's income statement for Year 2 follows: Sales $ 2,800 1,100 Cost of goods sold Gross margin 1,700 Selling and administrative expenses 400 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 Year 2 $ 210 $ 166 $ 34 $ 114 $5 $ 118 1,300 520 $ 780 Year 1 $ 255 $ 198 $ 26 $85 $ 30 $ 70 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 $13,000 gain on sale of investments and a $4,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above?

Name: Wiley Company's income statement for Year 2 follows:$ 2,8001,1001,700
Uploaded: 2024-03-05T11:47:04.000Z
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Description: Wiley Company's income statement for Year 2 follows:$ 2,8001,1001,7004001,300520$ 780SalesCost of goods soldGross marginSelling and administrative expensesIncome before taxesIncome taxesNet incomeThe company's selling and administrative expense for

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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