Balance Sheet and Income Statement Data Indicate the Following Based on the Data Presented, What Is the Times Interest

question 131

Multiple Choice

Balance sheet and income statement data indicate the following: $\begin{array}{lr}\text { Bonds payable, } 10 \% \text { (due in two years) } & \$ 1,000,000 \\\text { Preferred } 5 \% \text { stock, } \$ 100 \text { par (no change during year) } & 300,000 \\\text { Common stock, } \$ 50 \text { par (no change during year) } & 2,000,000 \\\text { Income before income tax for year } & 550,000 \\\text { Income tax for year } & 80,000 \\\text { Common dividends paid } & 50,000 \\\text { Preferred dividends paid } & 15,000\end{array}$
Based on the data presented, what is the times interest earned ratio? (Round to one decimal point.)

• A) 1.5
• B) 6.4
• C) 6.5
• D) 5.5

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