Charlie Driver has $35,000 saved and has decided to attend college, taking courses in marketing. To help pay his tuition and living expenses, he contracted with a mobile catering company as an independent driver. Charlie will run his mobile catering business on a cash basis; he has named his business Charlies Convenient Catering, or the 3C Company for short. He opened a company bank account with $35,000. He bought a used, fully equipped mobile catering company truck for $29,000, and operated from January 4 to December 31, 20x5.

Charlie Driver was pleased with the results of 3C Companys operation in year 20x5, especially since he only operated part-time basis. In fact, he found the catering business to be not only profitable but he also an enjoyable challenge. He decided to continue the 3C Company in year 2006, finish his hospitality and marketing education, and search for a suitable restaurant to acquire and operate.

Near the end of year 20x6, Charlie found an 84-seat restaurant that had been closed for several months. It was the type of facility he had been looking for. After locating the owner, he reached an agreement to lease the restaurant for five years beginning January 20x7. The lease set the first-year rental cost at $24,000 and stipulated a 10% yearly rental increase in each of the remaining four years of the five-year lease. In addition, the owner agreed to allow Charlie to trade in the old equipment and furnishings for whatever he can get for them and to purchase new equipment and furnishing. The equipment and furnishing were traded in on new equipment with a net cost of $71,524 and new furnishing with a net cost of $53,596. The new equipment was estimated to have a 12 -year life with a residual value of $6,500. The new furnishings had an estimated 8- year life and residual value of $2,620.

Charlie realized that for purposes and other considerations, he should incorporate a new company as Charlies Classic Cuisine Corporation. He simplified this name to the 4C company. With cash he had saved from operating the 3C Company and from the sale of the truck, Charlie purchased $50,000 of the 4C Companys $2.00 par value common stock. Charlie used his reputation and good business record over the past two years to obtain a corporate loan from his bank for $200,000. The loan was to be repaid over the next five years in monthly installments of principal and interest.

Although Charlie hired a bookkeeper, he has asked your team, a personal friend, to prepare the 4C Companys year-end financial statements and to discuss the results his first year of operations with your team. Your team agreed to prepare the year-end statements from a year-ending unadjusted trail balance of accounts provided to your team.

3. Prepare a short discussion of each calculated ratio, which you believe may be unsatisfactory, and explain why.aQuick Ratio

4. a) Credit card receivables turnover ratio

5. b) Account receivable turnover ratio

"4C Company Unadjusted Trial Balance December 31, 2007"
Accounts	Debit	Credit
Cash	$36,218
Credit card receivbles	13,683
Accounts Receivables	3,421
Inventories, Food	6,128
Inventories, Beverages	3,207
PrePaid insurance	2,136
Equipment	171,524
Furnishings	53,596
Accounts Payable		8,819
Bank Loan Payable		163,518
Common Stock		50,000
Sales Revenue, Food Operartions		458,602
Sales Revenue, Beverage Operartions		180,509
Purchases, food (net)	181,110
Purchases, Bevarages (net)	38,307
Salaies and wages expense	221,328
Laundry expense	16,609
Kitchen Fuel Expense	7,007
China and Tableware Expense	12,214
Glassware expense	1,605
Contract cleaning Expense	5,906
Lisenseces Expense	3,205
Misc. operating expense	4,101
Administravtive- general expenses	15,432
Marketing expenses	6,917
Utilities expenives	7,918
Insurance Expense	1,895
Rental Expense	24,000
Interest Expense	23,981
Unadjusted Trial Balance Totals	861,448	861,448

3. c) Food inventory turnover ratio

4. d) Beverage inventory turnover ratio

5. e)More which you believe may be unsatisfactory

Table 1 Results of Operations of Table service, Family-oriented, Lunch and Dinner Restaurant