Today is 1 January 20X2. Last night you were at a New Year's Eve party at which you ran into a long-lost friend, Gail Quigley, the owner of Quigley Mechanical. In conversation, Gail mentioned that her business would like to borrow \(\$ 50000\) from you now and repay you \(\$ 60000\) at the end of two years. Today she has dropped off the following balance sheet, along with her accounting records.

Your analysis of these items and the accounting records reveals the following information (the amounts in parentheses indicate deductions from each item).

Required:
a Using your analysis, prepare a properly classified 31 December 20Xl balance sheet (report form) for Quigley Mechanical.
b Calculate the current ratio and the quick ratio for the business on 31 December 20X1. Basing your decision solely on this information, would you loan \(\$ 50000\) to the business?

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Working capital Other assets Total QUIGLEY MECHANICALS Balance Sheet For year ended 31 December 20X1 $ 111000 Non-current liabilities Owner's equity Total 939 000 $1 050 000 $ 94 000 956 000 $1 050 000