Question

2 Compute the companys current ratio for the current yent. H for Le Chateau? Analyzing the Erfects of Transactions Using T-Accounts, Preparing a Statement of Pinancial Position, and Interpreting the Current Ratio over Time as a Bank Loan oficer (AP2-8) Lee Delivery Company Inc. was organized at the beginning of 2017. The following transactions occurred during 2017 (the company's first year of operations) a. Received S40,000 cash from the organizers in exchange for shares in the new company. A Purchased land for 816,000 and signed a one-year note (at a 6 percent annual interest rate). e Bought two used delivery trucks for operating purposes at the start of the year at a cost of S10,000 each paid 83,000 cash and signed a promiswory note for the balance, payalle over the next three years (at an annual interest rate of 7 percent). d. Sold one fourth of the land for $4,000 to Birkins Moving, which promised to pap in six months e Paid 82,000 cash to a truck repair shop fora new motor for one of the trucks Hint Lerease the account you used to record the purchase of the trucks since the usefulness nf th truck has been iεpovd ) P2-8 S Traded the other truck and $6,000 cash for a new one. The old trucks tair vau in 610000 g Shareholder Jonah Lee paid $27,00 cash for a vacant lo (lad) for his personal h. Collected the amount of the note due from Birkiras Moving in it) L. Paid one-thurd of the principal of the note due for the delivery trucks in (e) Required: I. Set up appropriate T-accounts with beginning balances of S0 for cash, short-term notes receivable, land, equipment, short-term notes payable, long-term notes payable, and contributed capital. Using the T-accounts, record the effects of these transactions on Lee Delivery Company 2 Prepare a classified statement of financial position for Lee Delivery Company at the end of 2017. Compute the current ratio at that date. 3. At the end of the next two years, Lee Delivery Company reported the following amounts on its statements of financial position December 31, 2018 December 31, 2019 $ 47,000 73.000 Current assets Non-current assets Total assets $52,000 38,000 90,000 23,000 17,000 40,000 120,000 40,000 20,000 Short term notes payable Long term notes payable Total liabilities 60,000

Answer 1

		NOTE: There will be no entry for item g, since it was personal transaction
	T-ACCOUNTS
	CASH
	Ref	DESCRIPTION	DEBIT	Ref	DESCRIPTION	CREDIT
		Beginning Balance	$0	c	Equipment Purchase	$5,000
	a	Capital	$40,000	e	Truck repair	$2,000
	h	Notes Receivable	$4,000	f	New Truck traded with old	$6,000
				i	Notes Payable(15000/3)	$5,000
		Ending Balance	$26,000
	SHORT TERM NOTES RECEIVABLE
	Ref	DESCRIPTION	DEBIT	Ref	DESCRIPTION	CREDIT
		Beginning Balance	$0	h	Cash	$4,000
	d	Land	$4,000
		Ending Balance	$0
	LAND
	Ref	DESCRIPTION	DEBIT	Ref	DESCRIPTION	CREDIT
		Beginning Balance	$0	d	Notes Receivable	$4,000
	b	Short Term Notes	$16,000
		Ending Balance	$12,000
	EQUIPMENT
	Ref	DESCRIPTION	DEBIT	Ref	DESCRIPTION	CREDIT
		Beginning Balance	$0	f	Old Truck	$10,000
	c	Purchase of Delivery Trucks	$20,000
	e	Cash	$2,000
	f	New Truck	$16,000
		Ending Balance	$28,000
	SHORT TERM NOTES PAYABLE
	Ref	DESCRIPTION	DEBIT	Ref	DESCRIPTION	CREDIT
					Beginning Balance	$0
				b	Land	$16,000
					Ending Balance	$16,000
	LONG TERM NOTES PAYABLE
	Ref	DESCRIPTION	DEBIT	Ref	DESCRIPTION	CREDIT
	i	Cash (15000/3)	$5,000		Beginning Balance	$0
				c	Equipment	$15,000
					Ending Balance	$10,000
	CONTRIBUTED CAPITAL
	Ref	DESCRIPTION	DEBIT	Ref	DESCRIPTION	CREDIT
					Beginning Balance	$0
					Cash	$40,000
					Ending Balance	$40,000
		STATEMENT OF FINANCIAL POSITION
		ASSETS:
		Cash	$26,000
		Short term notes receivable	$0
		Land	$12,000
		Equipment	$28,000
		Total Assets	$66,000
		LIABILITIES:
		Short Term Notes Payable	$16,000
		Long Term Notes Payable	$10,000
		Total Liabilities	$26,000
		Stockholders Equity
		Contributed Capital	$40,000
		Total Stockholders Equity	$40,000
		Total Liabilities and Stockholders Equity	$66,000