Balance sheet and income statement data indicate the following: $\begin{array}{lrr}&\text { Company A } & \text { Company B } \
\text { Bonds payable, } 8 \%, 24 \text {-year bonds } & \$ 1,200,000 & \$ 900,000 \
\text { Income before income tax for year } & 495,000 & 130,000 \
\text { Income tax for year } & 75,000 & 12,000 \
\text { Interest payable } & 50,000 & 0 \
\text { Interest receivable } & 21,000 & 28,000
\end{array}$ (a) For each company, what is the times interest earned ratio? (Round to one decimal place)
(b) Which company gives potential creditors more protection?

Question

Balance sheet and income statement data indicate the following: $\begin{array}{lrr}&\text { Company A } & \text { Company B } \
\text { Bonds payable, } 8 \%, 24 \text {-year bonds } & \$ 1,200,000 & \$ 900,000 \
\text { Income before income tax for year } & 495,000 & 130,000 \
\text { Income tax for year } & 75,000 & 12,000 \
\text { Interest payable } & 50,000 & 0 \
\text { Interest receivable } & 21,000 & 28,000
\end{array}$ ​ (a) For each company, what is the times interest earned ratio? (Round to one decimal place)
(b) Which company gives potential creditors more protection?

Quizplus · Accepted Answer

The Answer of Balance sheet and income statement data indicate the following: $\begin{array}{lrr}&\text { Company A } & \text { Company B } \
\text { Bonds payable, } 8 \%, 24 \text {-year bonds } & \$ 1,200,000 & \$ 900,000 \
\text { Income before income tax for year } & 495,000 & 130,000 \
\text { Income tax for year } & 75,000 & 12,000 \
\text { Interest payable } & 50,000 & 0 \
\text { Interest receivable } & 21,000 & 28,000
\end{array}$ ​ (a) For each company, what is the times interest earned ratio? (Round to one decimal place)
(b) Which company gives potential creditors more protection?

Balance Sheet and Income Statement Data Indicate the Following ​ (A) for Each Company, What Is the Times Interest

Balance Sheet and Income Statement Data Indicate the Following (A) for Each Company, What Is the Times Interest