Required information [The following information applies to the questions displayed below. On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances: Credit $ 1,800 Accounts Debit Cash $ 11, 200 Accounts Receivable 34,000 Allowance for Uncollectible Accounts Inventory 152,000 Land 67,300 Buildings 120,000 Accumulated Depreciation Accounts Payable Common Stock Retained Earnings Totals $384,500 9,600 17,700 200,000 155,400 $384,500 During January 2021, the following transactions occur: January Borrow $100,000 from Captive Credit Corporation. The installment note 1 bears interest at 7% annually and matures in 5 years. Payments of $1,980 are required at the end of each month for 60 months. January Receive $31,000 from customers on accounts receivable. 4 January Pay cash on accounts payable, $11,000. 10 January Pay cash for salaries, $28,900. 15 January Firework sales for the month total $195,000. Sales include $65,000 for 30 cash and $130,000 on account. The cost of the units sold is $112,500. January Pay the first monthly installment of $1,980 related to the $100,000 31 borrowed on January 1. Round your interest calculation to the nearest dollar. 7. Analyze the following for Freedom Fireworks: Requirement 1: a-1. Calculate the debt to equity ratio. X Answer is not complete. Choose Numerator . Debt to Equity Ratio Choose Denominator Average Total x= Assets Debt to Equity Ratio Debt to Equity Ratio 0 Total Assets X+ + a-2. If the average debt to equity ratio for the industry is 1.0, is Freedom Fireworks more or less leveraged than other companies in the same industry? Less leveraged More leveraged Requirement 2: b-1. Calculate the times interest earned ratio. Times Interest Earned Ratio Choose Numerator Choose Denominator Time Interest Earned Ratio Time Interest Earned Ratio 0 Net Income + Interest + Taxes + Interest + b-2. If the average times interest earned ratio for the industry is 20 times, is the company more or less able to meet interest payments than other companies in the same industry? More able to meet interest Less able to meet interest Requirement 3: c. Based on the ratios calculated in (a) and (b), would Freedom Fireworks be more likely to receive a higher or lower interest rate than the average borrowing rate in the industry? Lower interest rate Higher interest rate