Bill Corp. operates under ideal conditions of certainty. It acquired its sole asset on January 1, 2019. The asset will yield $725 cash at the end of each year from 2019 to 2021, inclusive, after which it will have no market value and no disposal costs. The interest rate in the economy is 5 percent. Purchase of the asset was financed by the issuance of common shares. Bill Corp. will pay a dividend of $50 at the end of 2019 and 2020.

Required

Prepare balance sheet for Bill Corp. at the end of 2019 and an income statement for the year ended December 31, 2019. 

2 marks for calculation (Present Value of Capital Asset)

1 mark for correct accounting format

3 marks for correct Balance sheet (2) and Income Statement (1)

Prepare balance sheet for Bill Corp. as at the end of 2020 and an income statement for the year ended December 31, 2020.

Answer rating: 100% (QA)

The income statement of the company is prepared for the purpose of determining the net income for th... View the full answer