Lee Delivery Company Inc was organized at the beginning of 2

P2-8 Analyzing the Effects of Transactions Using T-Accounts, Preparing a Statement of Financial Position, and Interpreting the Current Ratio over Time as a Bank Loan Officer LO2-5, 2-6 Lee Delivery Company Ine. was organized at the beginning of 2017. The following transactions occurred during 2017 (the company\'s first year of operations) a. Recelved $49,000 cash from the organizers in exchange for shares in the new company. b. Purchased land for $17,800 and signed a one-year note (at a 6 percent annual interest rate). G. Bought two used delivery trucks for operating purposes at the start of the year at a cost of $13,600 each paid $6,800 cash and signed a promissory note for the balance, payable over the next three years (at an annual interest rate of 7 percent) d. Sold one-fourth of the land for $4,450 to Birkins Moving, which promised to pay in six months 0.Paid $3,800 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 mproved f. Traded the other truck and $7,800 cash for new one. The old truck\'s fair value is S 13,600. g. Shareholder Jonah Lee paid $20,300 cash for a vacant lot land) for his personal use. h. Collected the amount of the note due from Birkins Moving in (d) Pald 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 Short-Term Note Recelvable Beg. bal. Beg bal End.ba End. bal.

Solution

Requirement 2b

             = 2.97 :1

Requirement 4

Should not extend loan.

Current ratio is reduced year to year. Inaddition to this, 2019 Current ratio is less than idle current ratio i.e. 2:1.

Cash
Begining Bal.	0
Contributed capital	49000	6800	Equipment
Short term Note Receivable	4450	3800	Equipment
Income	29300	7800	Equipment
		6800	Long Term Note Payable
		1428	Interest on Long term note payable
	82750	26628
Ending Bal.	56122
Short Term Note Receivable
Begining Bal.	0
Land	4450	4450	Cash
	4450	4450
Ending Bal.	0
land
Begining Bal.	0
Short term Notes Payable	17800	4450	Short term Note Receivable
	17800	4450
Ending Bal.	13350
Equipment
Begining Bal.	0
Cash	6800
Long term Notes payable	20400
Cash	3800
Cash	7800
	38800	0
Ending Bal.	38800
Short Term Notes payable
		0	Begining Bal.
		17800	Land
	0	17800
		17800	Ending Bal.
Long Term Notes payable
		0	Begining Bal.
Cash	6800	20400	Equipment
	6800	20400
		13600	Ending Bal.
Contributed Capital
		0	Begining Bal.
		49000	Cash
	0	49000
		49000	Ending Bal.
Income Statement
Interest on Long term note payable	1428	29300	Income on Vacant land
Interest on short term note payable	1068
	2496	29300
		26804	Retained Earnings