The Income Statement for Michigan Communications follows. Assume Michigan Com si
ID: 2418170 • Letter: T
Question
The Income Statement for Michigan Communications follows. Assume Michigan Com signed a 120-day, 12%,$9000 note on June 1, 2015, and that this was the only note payable for the company. Sales Revenue $32000 Less: Sales Ret and Allow $ 5300 Sales Discounts 3300 Net Sales $23400 Cost of Goods sold $13000 Gross Profit $10400 Operating Expenses: Selling expenses $650, admin Exp $1450 total Exp $2100, Operating Income $8300, Other Rev and Exp - Interest Exp ? Total Other Rev ? Net Income before Income Tax Exp ? Income Tax Exp $1620, Net Income ? Requirements: 1. Fill in the missing(?) information for Michigan's year ended July 31, 2015. 2. Compute the times-interest-earned ratio for the copmany
Explanation / Answer
Sales rev 32000
Sales ret (5300)
Discount (3300)
Net sales 23400
Profit (13000)
Cost 10400
Profit 13000
Operating exp (10400)
Sell exp (650)
Admin exp (1450)
Add: oper inc 8300
IBIT 8800
IBIT 8800
total tax (2100)
6700
Interest (88) ( int=120/365X12/100X9000X30/120=88)
6612 net income
Time interest earned ratio=IBIT/INTEREST EXP
8800/88=100 Times
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