Question 14.9: Times Interest Earned Harris Industries reported the followi...

Financial Accounting

Times Interest Earned

Harris Industries reported the following on the company’s income statement in 20Y7 and 20Y6:

	20Y7	20Y6
Interest expense	$ 200,000	$ 180,000
Income before income tax expense	1,000,000	720,000

a. Determine the times interest earned ratio for 20Y7 and 20Y6.

b. Is times interest earned ratio improving or declining?

The "Step-by-Step Explanation" refers to a detailed and sequential breakdown of the solution or reasoning behind the answer. This comprehensive explanation walks through each step of the answer, offering you clarity and understanding.
Our explanations are based on the best information we have, but they may not always be right or fit every situation.

The blue check mark means that this solution has been answered and checked by an expert. This guarantees that the final answer is accurate.
Learn more on how we answer questions.

This Question has been Answered.

Already have an account?

Related Answered Questions

Question: 14.5

Issuing Bonds at a Premium On the first day of the fiscal year, a company issues a $2,000,000, 12%, five-year bond that pays semiannual interest of $120,000 ($2,000,000 × 12% × 1/2), receiving cash of $2,154,440. Journalize the bond issuance. ...

Verified Answer:

Cash . . . . . . . . . . . . . . . . . . . . . . ....

Question: 14.3

Issuing Bonds at a Discount On the first day of the fiscal year, a company issues a $1,000,000, 6%, five-year bond that pays semiannual interest of $30,000 ($1,000,000 × 6% × 1/2), receiving cash of $936,420. Journalize the entry to record the issuance of the bonds. ...

Verified Answer:

Cash . . . . . . . . . . . . . . . . . . . . . . ....

Question: 14.7

Redemption of Bonds Payable A $500,000 bond issue on which there is an unamortized discount of $40,000 is redeemed for $475,000. Journalize the redemption of the bonds. ...

Verified Answer:

Bonds Payable . . . . . . . . . . . . . . . . . . ...

Question: 14.2

Issuing Bonds at Face Amount On January 1, the first day of the fiscal year, a company issues a $1,000,000, 6%, five-year bond that pays semiannual interest of $30,000 ($1,000,000 × 6% × ½ year), receiving cash of $1,000,000. Journalize the entries to record (a) the issuance of the bonds at their ...

Verified Answer:

a. Cash . . . . . . . . . . . . . . . . . . . ....

Question: 14.1

Alternative Financing Plans Gonzales Co. is considering the following alternative plans for financing its company: Income tax is estimated at 40% of income. Determine the earnings per share of common stock under the two alternative financing plans, assuming that income before bond interest and ...

Verified Answer:

Plan 1 Plan 2 Earnings before bond interest and ...

Question: 14.4

Discount Amortization Using the bond from Example Exercise 14-3, journalize the first interest payment and the amortization of the related bond discount. ...

Verified Answer:

Interest Expense . . . . . . . . . . . . . . . . ....

Question: 14.6

Premium Amortization Using the bond from Example Exercise 14-5, journalize the first interest payment and the amortization of the related bond premium. ...

Verified Answer:

Interest Expense . . . . . . . . . . . . . . . . ....

Question: 14.8

Journalizing Installment Notes On the first day of the fiscal year, a company issues a $30,000, 10%, five-year installment note that has annual payments of $7,914. The first note payment consists of $3,000 of interest and $4,914 of principal repayment. a. Journalize the entry to record the ...

Verified Answer:

a. Cash . . . . . . . . . . . . . . . . . . . . ...