Use the financial statements below to answer the question. RED Merchandising Statement of Financial Position For the year ended December 31, 2021 Accounts payable P 321,750 Income tax payable Accrued expense 39,638 30,800 Current portion of L.T. debt 165,000 Cash P110,400 Deferred income taxes 151,853 Accounts receivable 634,800 Current liabilities P 709,041 Inventory 167,000 Long-term debt 81,028 Current assets P 912,200 TOTAL LIABILITIES P 790,069 Property & equipment, Net 297,100 Common stock 19,500 TOTAL ASSETS P1,209,300 Paid-in capital Retained earnings 43,100 356,631 TOTAL EQUITY P419,231 Total liabilities & equity P 1,209,300 RED Merchandising Statement of Comprehensive Income For the year ended December 31, 2021 Sales P 6,638,400 Cost of goods sold 6,008,700 Gross Profit P 629,700 Operating expenses Operating Profit 535,500 P 94,200 Interest expense 32,500 Income before tax Php 61,700 Тах 31,219 Net Income P 30,481
Use the financial statements below to answer the question. RED Merchandising Statement of Financial Position For the year ended December 31, 2021 Accounts payable P 321,750 Income tax payable Accrued expense 39,638 30,800 Current portion of L.T. debt 165,000 Cash P110,400 Deferred income taxes 151,853 Accounts receivable 634,800 Current liabilities P 709,041 Inventory 167,000 Long-term debt 81,028 Current assets P 912,200 TOTAL LIABILITIES P 790,069 Property & equipment, Net 297,100 Common stock 19,500 TOTAL ASSETS P1,209,300 Paid-in capital Retained earnings 43,100 356,631 TOTAL EQUITY P419,231 Total liabilities & equity P 1,209,300 RED Merchandising Statement of Comprehensive Income For the year ended December 31, 2021 Sales P 6,638,400 Cost of goods sold 6,008,700 Gross Profit P 629,700 Operating expenses Operating Profit 535,500 P 94,200 Interest expense 32,500 Income before tax Php 61,700 Тах 31,219 Net Income P 30,481
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 8E: Cost of Goods Sold, Income Statement. and Statement of Comprehensive Income Gaskin Company derives...
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Question
Which of the following interprets the interest coverage ratio of RED Merchandising?
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It takes 3.2 times to earn the interest charges payment.
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It takes 2.9 times to earn the interest charges payment.
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It takes 3.9 times to earn the interest charges payment.
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It takes 2.6 times to earn the interest charges payment.
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