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imes interest earned Berry Company reported the following on the company's income statement in two recent...

imes interest earned

Berry Company reported the following on the company's income statement in two recent years:

    Current Year     Prior Year
Interest expense $353,000 $423,600
Income before income tax expense 5,542,100 6,777,600

a. Determine the number of times interest charges were earned for current Year and prior Year. Round to one decimal place.

Current Year fill in the blank 1
Prior Year fill in the blank 2

b. Is the number of times interest charges are earned improving or declining?

Business   Accounting   
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Answer #1

:: Current Year

>> Interest before income tax and interest = $ 5,542,100 - $ 353,000

>> Interest before income tax and interest = $ 5,189,100.

>> No of times interest charged = Interest before income tax and interest / Interest

>> No of times interest charged = $ 5,189,100 / $ 353,000

>> No of times interest charged = 14.7

:: Prior Year

>> Interest before income tax and interest = $ 6,777,600 - $ 423,600

>> Interest before income tax and interest = $ 6,354,000.

>> No of times interest charged = Interest before income tax and interest / Interest

>> No of times interest charged = $ 6,354,00 / $ 423,600

>> No of times interest charged = 15

:: Declining, Number of times interest is charged on earning is decreasing.

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