ting times-interest-earned ratio for Vermont Communications follows. Assume Verm
ID: 2520730 • Letter: T
Question
ting times-interest-earned ratio for Vermont Communications follows. Assume Vermont Com- ed a 3-month, 390, S6,000 note on June 1, 2018, and that this was the the income statement The Learning Objective note payable for the com 1. Net Income $9,620 VERMONT COMMUNICATIONS Income Statement Year Ended July 31, 2018 Net Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses $26,500 12,200 14,300 Selling Expenses Administrative Expenses Total Operating Expenses s 690 1,550 2,240 Operating Income Other Income and (Expenses): 12,060 Interest Expense Total Other Income and (Expenses) Net Income before Income Tax Expense Income Tax Expense Net Income 2,410 Requirements 1. Fill in the missing information for Vermont's year ended July 31, 2018, income statement. Round to the nearest dollar 2. Compute the times-interest-earned ratio for the company. Round to two decimals.Explanation / Answer
Answer 1
Note : Interest expense for year ended July 31 , 2018 = $6,000 * 3 % * 2 months / 12 months = $30
VERMONT COMMUNICATIONS
Income Statement
Year Ended July 31 , 2018
Answer 2
Times - interest - earned ratio = (Net Income + Income Tax Expense + Interest Expense) / Interest Expense
=( $9,620 + $2,410 + $30) / $30 = $120,60 / $30 = 402 times
Net Sales Revenue $26,500 Cost of goods sold 12,200 Gross Profit 14,300 Operating Expenses : Selling Expenses 690 Administrative Expenses 1,550 Total Operating Expenses 2,240 Operating Income 12,060 Other Income & (Expeenses) : Interest Expense (Ref note) 30 Total Other Income & (Expeenses) 30 Net Income before Income Tax Expense 12,030 Income Tax Expense 2,410 Net Income $9,620Related Questions
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