Lee Delivery Company was organized at the beginning of Year 1 The following transactions occurred during the year Received $44,500 cash from the organizers in exchange for shares in the new company Purchased land for $16,900 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 $11,800 each paid $5,900 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 $4,225 to Birkins Moving, which promised to pay in six months Paid $2,900 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 $6,900 cash for a new one The old trucks fair value is $11,800 Shareholder Jonah Lee paid $28,400 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 b Compute the current ratio at that date (Round the final answer 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 banks vice president about lending the money to Lee Delivery Company multiple choice Should extend loan Should not extend loan 2 a Prepare a classified statement of financial position for Lee Delivery Company at the end of Year 1 3 a Compute the company's current ratio for Years 1, 2, and 3 (Round the final answers to 2 decimal places

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Lee Delivery Company was organized at the beginning of Year 1. The following transactions occurred during the year: Received $44,500 cash from the organizers in

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

Received $44,500 cash from the organizers in exchange for shares in the new company.
Purchased land for $16,900 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 $11,800 each; paid $5,900 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 $4,225 to Birkins Moving, which promised to pay in six months.
Paid $2,900 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 $6,900 cash for a new one. The old trucks fair value is $11,800.
Shareholder Jonah Lee paid $28,400 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-b. Compute the current ratio at that date. (Round the final answer 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 banks vice-president about lending the money to Lee Delivery Company?

multiple choice

Should extend loan

Should not extend loan

2-a. Prepare a classified statement of financial position for Lee Delivery Company at the end of Year 1. 3-a. Compute the company's current ratio for Years 1, 2, and 3. (Round the final answers to 2 decimal places