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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Identify each statement as true or false. If false, indicate how to correct the statement. (And you have forgotten to answer the right ans of false in the previous question)
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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?
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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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The discount on bonds payable is charged to interest expense a.Using the effective interest method b.Only in the year the bond matures c.Equally over the life of the bond d.only in the year the bond is issued

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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