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Author Question: The income statement for Otto Construction Company appears below:Net sales (all credit ... (Read 53 times)

ncasson210

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on: Feb 5, 2023

Question 1

The 2021 and 2022 partial balance sheets for Ottoman Manufacturing Company appear below:

​​20212022
Current liabilities$  20,000$  30,000
Noncurrent liabilities    60,000    40,000
Total liabilities80,00070,000
Stockholders' equity​​
  Common stock2,0002,000
  Additional paid-In capital4,0004,000
  Retained earnings   40,000   26,000
Total stockholders' equity   46,000   32,000
Total liabilities and stockholders' equity$126,000$102,000

What is the debt-to-equity ratio for 2022?
◦ 2.19
◦ 1.80
◦ 0.46
◦ 1.25

Question 2

The income statement for Otto Construction Company appears below:

Net sales (all credit sales)$180,000
Cost of goods sold 100,000
Gross margin80,000
Operating expenses30,000
Interest expense   12,000
Income before taxes38,000
Income tax     9,500
Net income$  28,500

Average total assets total $240,000. Otto's income tax rate is 25%. What is the times interest earned ratio?
◦ 3.16
◦ 2.38
◦ 4.17
◦ 3.13
Managerial Accounting ¦ Davis ¦ 4th Edition
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Marked as best answer by ncasson210 on Feb 5, 2023

Sha

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Reply #1 on: Feb 5, 2023
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ncasson210

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Reply 2 on: Feb 5, 2023
Excellent

cpetit11

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Reply 3 on: Yesterday
Wow, this really help

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