Problem
The following data were taken from the financial statements of Weal Construction Inc. for December 31, 2012 and 2011:
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Dec. 31, 2012
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Dec. 31, 2011
|
|
Accounts payable
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$112,000
|
|
$130,000
|
|
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Current maturities of serial bonds payable
|
150,000
|
|
180,000
|
|
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Serial bonds payable, 10%, issued 2005, due 2015
|
740,000
|
|
1,110,000
|
|
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Common stock, $1 par value
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70,000
|
|
80,000
|
|
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Paid-in capital in excess of par
|
730,000
|
|
740,000
|
|
|
Retained earnings
|
2,540,000
|
|
2,020,000
|
|
The income before income tax was $222,500 and $206,400 for the years 2012 and 2011, respectively.
a. Determine the ratio of liabilities to stockholders' equity at the end of each year.
b. Determine the number of times the bond interest charges are earned during the year for both years.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.