QC ltd operates under ideal conditions of uncertainty. On january 1, 2015, it purchased a capital asset that will last for two full years and then will be retired with zero salvage. The purchase price was financed with an issue of common stock. QC Ltd plans to pay no dividends until after the end of 2016. The interest rate in the economy is 6%. QC Ltd is certain that net cash flow from its only asset will be $100 in 2015. However, net cash flow in 2016 is uncertain. Net cash flows in 2016 will be $200 with objective probability of 0.6 and $50 (low state) with objective probability of 0.4 all cash flows are received at year ends. At the end of year 2 the high state is realized. Required:
a. How much did QC Ltd. pay for its capital asset at the beginning of 2015? Show calculations.
b. Prepare, in good form, an income statement for QC Ltd. for the second year of operations—that is, 2016.
c. Prepare, in good form, a balance sheet for QC Ltd. at the end of 2016 (before any dividend payments).

Bridgeport company began operations at the beginning of 2018. the following information pertains to this company. 1. pretax financial income for 2018 is $115,000. 2. the tax rate enacted for 2018 and future years is 40%. 3. differences between the 2018 income statement and tax return are listed below: (a) warranty expense accrued for financial reporting purposes amounts to $7,500. warranty deductions per the tax return amount to $2,200. (b) gross profit on construction contracts using the percentage-of-completion method per books amounts to $94,700. gross profit on construction contracts for tax purposes amounts to $67,100. (c) depreciation of property, plant, and equipment for financial reporting purposes amounts to $61,800. depreciation of these assets amounts to $75,700 for the tax return. (d) a $3,600 fine paid for violation of pollution laws was deducted in computing pretax financial income. (e) interest revenue recognized on an investment in tax-exempt municipal bonds amounts to $1,500. 4. taxable income is expected for the next few years. (assume (a) is short-term in nature; assume (b) and (c) are long-term in nature.) (a) prepare the reconciliation schedule for 2017 and future years. (b) prepare the journal entry to record income tax expense for 2017. (c) prepare the income tax expense section of the income statement beginning with “income before income taxes.” (d) determine how the deferred taxes will appear on the balance sheet at the end of 2017.