The balance sheet for Appalachian Corporation at the end of the current year includes the following: $\begin{array}{lrr}
\text { Bonds payable, 6 \% } &\$5,000,000\
\text {6 \% Preferred stock, \$100 par } &1,000,000\
\text { Common stock, \$ 10 par} &2,000,000
\end{array}$
Net income was $565,000 and income tax expense for the current year amounted to $285,000. Cash dividends paid on common stock were $200,000, and the common stock was selling for $28 per share at the end of the year. There were no ownership changes during the year.
Instructions
Determine each of the following:
(a) Number of times that bond interest was earned.
(b) Earnings per share for common stock.
(c) Price-earnings ratio.

Question

The balance sheet for Appalachian Corporation at the end of the current year includes the following: $\begin{array}{lrr}
  \text {  Bonds payable,  6 \% } &\$5,000,000\
 \text {6 \% Preferred stock, \$100 par  } &1,000,000\
 \text {  Common stock, \$ 10  par} &2,000,000
\end{array}$
 Net income was $565,000 and income tax expense for the current year amounted to $285,000. Cash dividends paid on common stock were $200,000, and the common stock was selling for $28 per share at the end of the year. There were no ownership changes during the year.
Instructions
Determine each of the following:
(a) Number of times that bond interest was earned.
(b) Earnings per share for common stock.
(c) Price-earnings ratio.

Quizplus · Accepted Answer

The Answer of The balance sheet for Appalachian Corporation at the end of the current year includes the following: $\begin{array}{lrr}
  \text {  Bonds payable,  6 \% } &\$5,000,000\
 \text {6 \% Preferred stock, \$100 par  } &1,000,000\
 \text {  Common stock, \$ 10  par} &2,000,000
\end{array}$
 Net income was $565,000 and income tax expense for the current year amounted to $285,000. Cash dividends paid on common stock were $200,000, and the common stock was selling for $28 per share at the end of the year. There were no ownership changes during the year.
Instructions
Determine each of the following:
(a) Number of times that bond interest was earned.
(b) Earnings per share for common stock.
(c) Price-earnings ratio.

The Balance Sheet for Appalachian Corporation at the End of the Current