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erma4kov [3.2K]
3 years ago
5

Kieso Company borrowed $630,000 for five months. The annual interest rate on the loan was 12%. Kieso's fiscal year ends on Decem

ber 31. Kieso borrowed the $630,000 one month prior to the start of its current fiscal year and paid back the $630,000 plus interest four months into its current fiscal year. In regards to this loan, how much interest expense, if any, would Kieso report at the end of its last fiscal year? At the end of its current fiscal year?
Business
1 answer:
dusya [7]3 years ago
6 0

Answer:

1.$62,748

2. $31,752

Explanation:

The computation of End of fiscal year and current fiscal year is given below:-

End of fiscal year = Borrowed amount × Interest rate × one month ÷ Total number of months

= $630,000 × 12% × 1 ÷ 12

= $630,000 × 12% × 0.083

= $62,748

Current fiscal year = Paid back amount × Interest rate × Four month ÷ Total number of months

= $630,000 × 12% × 5 ÷ 12

= $630,000 × 12% × 0.42

= $31,752

So, we applied the above formula.

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The Morris Corporation has $350,000 of debt outstanding, and it pays an interest rate of 12% annually. Morris's annual sales are
Anni [7]

Answer:

TIE 2.47

Explanation:

\frac{EBIT}{InterestExpense} = $Times Interest Earned

Our first step will be calculate the interest expense

350,000 debt outstanding * 12% rate = 42,000

Next, we need the EBIT which means Earnings Before Interest and Taxes.

Using the net profit margin of 3% we can get the net income

This means 3% of sales become net income

We are going to apply this to Morris sales to get the net income

1,750,000 * 0.03 = 52,500

Now this include the interest and taxes, we need to get the Earning before those two concepts so:

\frac{NetIncome}{1-Tax Rate} + $Interest Expense = Earnings Before Interest and Taxes

52,500/(1-0.40)+42,000 = 87,500 + 42,000 = 129,500

Now we got everything needed for the TIE

129,500/52,500 = 2.47

3 0
3 years ago
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Answer:

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Explanation:

cause 1f

6 0
3 years ago
It is generally believed that LBOs (leveraged buyouts) occur because of: managerial mistakes or self-interest. poor financial pe
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Answer:

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Explanation:

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8 0
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Answer:

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In contingency planning, a(n) _________ that threatens the security of the organization's information is called an _________
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