Question

Road Runner Corporation operated a small courier business under ideal conditions. On January 1, 2021, Road Runner began operations by acquiring a delivery truck. In order to purchase the truck, Road Runner issued common shares. The delivery truck had a useful life of nine years, at the end of which time it would be worthless. The economy’s interest rate was 3%. At the time of purchase, Road Runner anticipated the cash flows from the delivery truck would be $4,100 in a good year, and only $850 in a bad year. In each year, Road Runner estimated a 35% chance of a good year, and a 65% chance of a bad year. The events of any one year had no impact on the probability of a good or bad year in the future. Road Runner’s customers paid on December 31 of each year. Road Runner did not spend any of the cash received; instead, Road Runner saved the cash in a bank account that paid interest of 3% at the end of each year (not including the year it was deposited). REQUIRED: b) Continue assuming that 2021 was a good year, now assume that 2022 was a bad year. Prepare an income statement and balance sheet for Road Runner Corporation for the year ended December 31, 2022. - End of Assignment 1 -

Answer 1

6 Answer Income Statement of the year corded 2002 Particilar Amount Revenue from operations 850 3 123$ othes Scome 4100X3% $ 973 Total revenue -100 $ less :- depretitivos (900 873& Net profit

Balance sheet (31/12/22) Particular lamont (31/12/22) amocort (31/12/22) Equity & Liability 900 $ 900 & 4000 $ 4873 $ share Capital (900) other equity (Net profit (+ 4000+873) Total Equity & Liability 4900 $ 5773 $ Assets Property, plast seguip Truck=800-100 800 $ 700$ 4993 $ Bank (4-100+893) 4100 $ 4900 5673 $ Total Assets