Lee Delivery Company was organized at the beginning of Year $1.$ The following transactions occurred during the year:

Received $$46,500$ cash from the organizers in exchange for shares in the new company.

Purchased land for $$17,300$ and signed a one$-$year note $($at a $6$ percent annual interest rate$).$

Bought two used delivery trucks for operating purposes at the start of the year at a cost of $$12,600$ each; paid $$6,300$ cash and signed a promissory note for the balance, payable over the next three years $($at an annual interest rate of $7$ percent$).$

Sold one$-$fourth of the land for $$4,325$ to Birkins Moving, which promised to pay in six months.

Paid $$3,300$ cash to a truck repair shop for a new motor for one of the trucks. $($Hint: Increase the account you used to record the purchase of the trucks since the usefulness of the truck has been improved.$)$

Traded the other truck and $$7,300$ cash for a new one. The old truck$$s fair value is $$12,600.$

Shareholder Jonah Lee paid $$28,800$ cash for a vacant lot $($land$)$ for his personal use.

Collected the amount of the note due from Birkins Moving in $($d$).$

Paid one$-$third of the principal of the note due for the delivery trucks in $($c$).$

Required:

$1.$ Post the above transactions into the appropriate T$-$accounts, beginning balances is $$0$ for all accounts.

$2-$a$.$ Prepare a classified statement of financial position for Lee Delivery Company at the end of Year $1.$

$2-$b$.$ Compute the current ratio at that date. $($Round the final answer to $2$ decimal places.$)$

$3.$ At the end of the next two years, Lee Delivery Company reported the following amounts on its statements of financial position:

December $31,$ Year $2$ December $31,$ Year $3$

Current assets $ $58,500$ $ $53,500$

Non$-$current assets $44,50079,500$

Total assets $103,000133,000$

Short$-$term notes payable $29,50046,500$

Long$-$term notes payable $23,50026,500$

Total liabilities $53,00073,000$

Shareholders' equity $50,00060,000$

$3-$a$.$ Compute the company$$s current ratio for Years $1,2,$ and $3.($Round the final answers to $2$ decimal places.$)$

$4.$ At the beginning of Year $4,$ Lee Delivery Company applied to your bank for a $$50,000$ short$-$term loan to expand the business. The vice$-$president of the bank asked you to review the information and make a recommendation on lending the funds based solely on the results of the current ratio. What recommendation would you make to the bank$$s vice$-$president about lending the money to Lee Delivery Company?

multiple choice

Should extend loan

Should not extend loan