Balance sheet and income statement data indicate the following: Company A Company B Bonds payable, 8% (issued 2000, due 2024) $1,200,000 $900,000 Preferred 5% stock, $100 par (no change during year) 300,000 400,000 Common stock, $50 par (no change during year) 1,000,000 1,000,000 Income before income tax for year 495,000 130,000 Income tax for year 75,000 12,000 Common dividends paid 50,000 0 Preferred dividends paid 15,000 20,000 a.For each company, what is the number of times bond interest charges were earned (round to one decimal place)? Company A fill in the blank 1 Company B fill in the blank 2 b.Which company gives potential creditors the most protection?

Balance sheet and income statement data indicate the following: Company A Company B Bonds payable, 8% (issued 2000, due 2024) $1,200,000 $900,000 Preferred 5% stock, $100 par (no change during year)...

Balance sheet and income statement data indicate the following:

	Company A	Company B
Bonds payable, 8% (issued 2000, due 2024)	$1,200,000	$900,000
Preferred 5% stock, $100 par (no change during year)	300,000	400,000
Common stock, $50 par (no change during year)	1,000,000	1,000,000
Income before income tax for year	495,000	130,000
Income tax for year	75,000	12,000
Common dividends paid	50,000	0
Preferred dividends paid	15,000	20,000

a.For each company, what is the number of times bond interest charges were earned (round to one decimal place)?

Company A	fill in the blank 1
Company B	fill in the blank 2

b.Which company gives potential creditors the most protection?

Jun 10, 2022