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:
Current assets: $56,000
Non-current assets: $42,000
Total assets: $98,000
Short-term notes payable: $27,000
Long-term notes payable: $21,000
Total liabilities: $48,000
Shareholders' equity: $50,000
December 31, Year 3:
Current assets: $51,000
Non-current assets: $77,000
Total assets: $128,000
Short-term notes payable: $44,000
Long-term notes payable: $24,000
Total liabilities: $68,000
Shareholders' equity: $60,000
3-a. Compute the company's current ratio for Years 1, 2, and 3. (Round the final answers to 2 decimal places.)
Year 1:
Current assets: $0 (not provided)
Non-current assets: $0 (not provided)
Total assets: $0 (not provided)
Short-term notes payable: $0 (not provided)
Long-term notes payable: $0 (not provided)
Total liabilities: $0 (not provided)
Shareholders' equity: $0 (not provided)
Current ratio: N/A (not enough information provided)
Year 2:
Current assets: $56,000
Non-current assets: $42,000
Total assets: $98,000
Short-term notes payable: $27,000
Long-term notes payable: $21,000
Total liabilities: $48,000
Shareholders' equity: $50,000
Current ratio: (Current assets / Current liabilities)
Current ratio: ($56,000 / $27,000) = 2.07
Year 3:
Current assets: $51,000
Non-current assets: $77,000
Total assets: $128,000
Short-term notes payable: $44,000
Long-term notes payable: $24,000
Total liabilities: $68,000
Shareholders' equity: $60,000
Current ratio: (Current assets / Current liabilities)
Current ratio: ($51,000 / $44,000) = 1.16