Placement of Interest in Income Statement Two companies have the following balance sheets as of December 31,

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Placement of Interest in Income Statement Two companies have the following balance sheets as of December 31, 20X8: Jupiter Company Cash $50,000 Note payable* $100,000 Other assets 150,000 Stockholders' equity 100,000 Total $200,000 Total $200,000 8% annual interest. Saturn Company Cash Other assets Total $ 50,000 150,000 $200,000 Stockholders' equity $200,000 In 20X9, each company had sales of $600,000 and expenses (excluding interest) of $525,000. Ignore income taxes. Jupiter had not repaid the $100,000 Note Payable as of December 31, 20X9. Neither company incurred any new interest-bearing debt in 20X9. Did the two companies earn the same net income and the same operating income? Explain, showing computations of operating income and net income.

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Introduction To Financial Accounting

ISBN: 0131479725

9th Edition

Authors: Charles T Horngren, John A Elliott

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