Alex Corporation operates under ideal conditions of certainty. It acquired its sole asset (a pen making machine) on January 1, Year 8. The asset will yield $1,600 cash for 2 years at the end of year 9 and year 10. Salvage value or disposal costs are expected to be zero. The interest rate in the economy is 4%. Purchase of the asset was financed by the issuance of common shares. Alex Corporation will pay no dividend at the end of each year.

Required

a. Prepare a balance sheet and income statement as at the end of December 31, Year 9. (10 marks)