I need someone to help me in solving these exercises A company had income before interest...

Question

Question

I need someone to help me in solving these exercises

A company had income before interest expense and income taxes of $176,000, and its interest expense is $55,000. Calculate the company's times interest earned ratio.
A company borrowed $60,000 by signing a 60-day, 10% note payable from its bank. Compute the total cash payment due on the note's maturity date.

Answer 1

Answer #1

time interest earned ratio = Earning before interest and tax / interest expense

= 176,000 / 55,000

= 3.2 times

interest on note's payable = 60,000 x 10% = 6,000 x 2/12

= 1,000

cash payment due on note's maturity date = capital + interest

= 60,000 + 1,000

= 61,000

company has to pay 61,000 cash to bank on note's maturity.

Answer 2

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