Chapter 11, Problem P11.29APGA

Computing times-interest-earned ratio

The income statement for Utah Communications follows. Assume Utah Communications signed a 120-day, 12% $4,000 note on June 1, 2016, and that this was the only note payable for the company.

UTAH COMMUNICATIONS

Income Statement

Year Ended July 31- 2016

Sales Revenue $ 33.000

Less: Sales Returns and Allowances 5,100

Sales Discounts 2,900

Net Sales Revenue $ 25,000

Cost of Goods Sold 9,000

Gross Profit 16,000

Operating Expenses:

Selling Expenses 730

Administrative Expenses 1,500

Total Operating Expense 2,230

Operating Income 13,770

Other Revenues and (Expenses):

Interest Expense ?

Total Other Revenues and (Expenses) ?

Net Income before Income Tax Expense ?

Income Tax Expense 2,740

Net Income $ ?

Requirements

1. Fill in the missing information for Utah's year ended July 31, 2016, income statement.

2. Compute the times-interest-earned ratio for the company.