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hard accounting question?
Balance sheet and income statement data indicate the following:
Bonds payable, 6% (issued 2000, due 2020) $1,200,000
Preferred 8% stock, $100 par
(no change during the year) 200,000
Common stock, $50 par
(no change during the year) 1,000,000
Income before income tax for year 340,000
Income tax for year 80,000
Common dividends paid 60,000
Preferred dividends paid 16,000
Based on the data presented above, what is the number of times bond interest charges were earned (round to two decimal places)?
a. 5.72
b. 6.83
c. 4.72
d. 4.83
please help me out...i am stuck
3 Answers
- CocoLv 78 years agoFavorite Answer
a. 5.72
$1,200,000 x 6% = $72,000 Interest Expense on Bonds Payable
Number of Times Interest Earned = (Income before interest + tax) / Interest Expense
(340,000 + 72,000) / 72,000 = 5.72
- ?Lv 45 years ago
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- 6 years ago
Balance sheet and income statement data indicate the following:
Bonds payable, 12% (issued 1998, due 2022)
$1,000,000
Preferred 5% stock, $100 par (no change during year)
300,000
Common stock, $50 par (no change during year)
2,000,000
Income before income tax for year
300,000
Income tax for year
80,000
Common dividends paid
50,000
Preferred dividends paid
15,000
Based on the data presented above, what is the number of times interest charges were earned (rounded to one decimal place)?