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AICPA BB: Industry, LegalAICPA FN: MeasurementLearning Objective: P4144. Identify and discuss the factors involved in computing federal income taxesfor employees.The amount of federal income tax withheld for each employee depends on (1) anemployee's earnings level and (2) the number of withholding allowances claimedby the employee. This amount can be determined by using a wage bracketwithholding table.Difficulty: HardLearning Objective: P5Problems145. A company had income before interest expense and income taxes of $176,000,and its interest expense is $55,000. Calculate the company's times interestearned ratio.$176,000/$55,000 = 3.2AACSB: AnalyticAICPA BB: IndustryAICPA FN: Risk AnalysisLearning Objective: A1146. A company's income before interest expense and income taxes is $302,400,and its interest expense is $72,000. Calculate the company's times interestearned ratio.$302,400/$72,000 = 4.2AACSB: AnalyticAICPA BB: IndustryAICPA FN: Risk AnalysisLearning Objective: A1
147. A company's income before interest expense and income taxes in 2008 and2009 is $225,000 and $200,000, respectively. Its interest expense was $45,000for both years. Calculate the company's times interest earned ratio, and commenton its level of risk.2008 $225,000/45,000 = 52009 $200,000/45,000 = 4.4Risk analysis: The income before interest expense has decreased, but theinterest expense appears fixed. Consequently, the company's risk has increasedover the 2-year period.AACSB: AnalyticAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: MediumLearning Objective: A1148. A company's income before interest expense and income taxes in 2008 and2009 is $395,000 and $427,000, respectively. Its fixed interest expense was$125,000 for both years. Calculate the company's times interest earned ratio,and comment on its level of risk.2008: $395,000/$125,000 = 3.22009: $427,000/$125,000 = 3.4Risk analysis: The income before interest expense has increased, but theinterest expense appears fixed. Consequently, the company's level of risk hasdecreased over the 2-year period. The company is improving on its ability tomeet fixed interest expense.AACSB: AnalyticAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: MediumLearning Objective: A1149. Home Depot's income before interest expense and income taxes was $5,909million, and interest expense was $37 million. Calculate Home Depot's timesinterest earned.$5,909/$37 = 159.7AACSB: AnalyticAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: MediumLearning Objective: A1150. Coke had income before interest expense and income taxes of $5,698 millionand interest expense of $199 million. Calculate Coke's times interest earned.$5,698/$199 = 28.6AACSB: AnalyticAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: MediumLearning Objective: A1151. Wal-Mart had income before interest expense and income taxes of $12,581million and interest expense of $1,063 million. Sears had income before interest
expense and income taxes of $3,596 million and interest expense of $1,143million. Calculate the times interest earned for each company and comment on theresults.

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Term
Summer
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Test, The Land, Dividend

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