Balance sheet and income statement data indicate the following:Bonds payable, 11% (due in 15 years)$1,140,000Income before income tax for year410,000Income tax for year123,000Interest payable33,000Interest receivable19,000Assuming bond interest is the only interest expense and there is no bond premium or discount, what is the times interest earned ratio? (Round to two decimal places.)Oa. 3.27Ob. 1.29O c. 4.27O d. 2.29

Time interest earned ratio indicates the performance of the company to payout interest expenses of…

Answered: Assuming bond interest is the only…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The formula for computing interest on a note is: Principal of the notex Annual interest rate x Time expressed in fraction of year. True or False True False
2.-In compound interest calculations, the interest rate applied can be known from the initial and final value of a deposit, and the time it was deposited. true or false?
Question 47: Match each financial function to its best description. PMT PV Table FV Calculates the value of a bond at a later date Calculates the required payment for a bond Calculates the current value of a bond
Question 45: When a bond is sold for more than its face value, it is said to have been sold at _____. Answer: A. a premium B. a discount C. par D. a profit
Refer to Chapter 10, page 567: Stated rate of interest versus the market rate of interest Required Indicate whether a bond will sell at a premium (P), discount (D), or face value (F) for each of the following conditions: ____ The stated rate of interest is higher than the market rate. ____ The market rate of interest is equal to the stated rate. ____ The market rate of interest is less than the stated rate. ____ The stated rate of interest is less than the market rate. ____ The market rate of interest is higher than the stated rate
A. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? 24 B. Were they issued at a discount or a premium?
6. When is interest expense more than interest paid? a. when bonds are sold at a premiumb. when bonds are sold at parc. when bonds are sold at a discountd. when bonds are sold at a yield
Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $12,000,000 of 5-year, 11% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 12%, resulting in Ebert Company receiving cash of $11,558,459. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round amounts to the nearest dollar. If an amount box does not require an entry, leave it blank. 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 3. Second semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry. leave it blank.
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11. Under the straight-line amortization method, interest expense on a bond sold at a premium is equal to the a. interest paid plus bond premium amortizationb. interest rate times the book value of the bondsc. interest rate times the face value of the bondsd. interest paid minus bond premium amortization

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Assuming bond interest is the only interest expense and there is no bond premium or discount, what is the times interest earned ratio? (Round to two decimal places.) O a. 3.27 Ob. 1.29 O c. 4.27 O d. 2.29