Answer: GAMA Corp. has a lower times interest earned (TIE) ratio
Explanation:
The times interest earned (TIE) ratio simply means how the ability of a company to meet its debt obligations is being measured based on the current income that the company has.
Since GAMA Corp. has a higher debt to asset ratio and, therefore, a higher interest expense, it simply means that GAMA Corp. has a lower times interest earned (TIE) ratio when compared to FAMA Corp.
Therefore, the correct option is A.
Following a budget will help you keep you out of debt if you are currently in debt.
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journal entry to record the collection of the note would be:
debit to Notes Receivable for $20,000
credit to Notes Receivable for $20,300
debit to Interest Receivable for $300
*credit to Interest Revenue for $300
More about journal entry:
A journal entry is a record of a business transaction in an organization's accounting system. Journal entries are the foundation of the double-entry accounting method, which has been used to keep financial records for centuries. They allow a company to track what its resources have been used for and where those resources came from.
More about Notes Receivable:
Amounts owed by customers for which a formal credit agreement has been written and signed Typically used when payment is not expected for more than 60 days. A formal credit account requiring interest is sometimes used to settle an account receivable. Depending on the term of the note, it can be a current or noncurrent asset. The borrower on a note is referred to as the "Maker." The "payee" is the party making the loan.
Interest Receivable:
It is the interest earned by the company, but not yet collected in cash.
Learn more about Receivable here:
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Answer: $1,750
Explanation:
Incurring a health insurance cost of $5,000 or increasing salaries by $5,000 will have the same effect on the taxes because they will both be removed from the income before the taxes are calculated.
The reduction in tax in either case is:
= Expense * Tax rate
= 5,000 * 35%
= $1,750