Question

Required information [The following information applies to the questions displayed below.] Bailey Delivery Company, Inc., was organized in 2018 in Wisconsin. The following transactions occurred during the year: a. Received cash from investors in exchange for 11,000 shares of stock (par value of $1.00 per share) with a market value of $6 per share. b. Purchased land in Wisconsin for $23,000, signing a one-year note (ignore interest). c. Bought two used delivery trucks for operating purposes at the start of the year at a cost of $11,000 each; paid $3,000 cash and signed a note due in three years for the rest (ignore interest). d. Paid $2,200 cash to a truck repair shop for a new motor for one of the trucks. (Increase the account you used to record the purchase of the trucks because the productive life of the truck has been improved) e. Sold one-fourth of the land for $5,750 to Pablo Development Corporation, which signed a six-month note. f. Stockholder Helen Bailey paid $28,200 cash for a vacant lot (land) in Canada for her personal use. 4. At the end of the next two years, Bailey Delivery Company reported the following amounts on its balance sheets: December 31, 2020 $ 49,000 73,000 December 31, 2019 $56,000 Current Assets Long-Term Assets 43,000 99,000 18,000 Total Assets 122,000 44,000 Short-Term Notes Payable Long-Term Notes Payable Total Liabilities 20,000 64,000 17,000 35,000 64,000 58,000 Stockholders' Equity Compute the company's current ratio for 2018, 2019, and 2020. (Round your answers to 2 decimal places.) Year Current Ratio 2018 2019 2020

Answer 1

Current Ratio = Total Current Assets / Total Current Liabilities

	Dec 31 ,2018	Dec 31 ,2019	Dec 31 ,2020
Current Assets	$    94,750.00	$    56,000.00	$    49,000.00
Current Liabilities	$    42,000.00	$    18,000.00	$    44,000.00
Current Ratio	2.26 times	3.11 times	1.11 times