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.
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ACCOUNTING PRINCIPLES 122 5/16 >C<
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