The following information applies to the questions displayed below On January 1, Year 1, the general ledger of Company A includes the following account balances Accounts Debit Credit Cash $ 12,900 Accounts Receivable 37,400 Inventory 153,700 Land 84,300 Buildings 137,000 Allowance for Uncollectible Accounts $ 3,500 Accumulated Depreciation 11,300 Accounts Payable 36,400 Common Stock 217,000 Retained Earnings 157,100 Totals $ 425,300 $ 425,300 During January Year 1, the following transactions occur January 1 Borrow $117,000 from Company B Corporation The installment note bears interest at 4 annually and matures in 5 years Payments of $2,155 are required at the end of each month for 60 months January 4 Receive $32,700 from customers on accounts receivable January 10 Pay cash on accounts payable, $28,000 January 15 Pay cash for salaries, $30,600 January 30 Company A sales for the month total $198,000 Sales include $66,700 for cash and $131,300 on account The cost of the units sold is $119,000 January 31 Pay the first monthly installment of $2,155 related to the $117,000 borrowed on January 1 Round your interest calculation to the nearest dollar 7 Analyze the following for Company A Requirement 1 a 1 Calculate the debt to equity ratio a 2 If the average debt to equity ratio for the industry is 1, is Company A more or less leveraged than other companies in the same industry multiple choice 1 Less leveraged More leveraged Requirement 2 b 1 Calculate the times interest earned ratio b 1 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 multiple choice 2 More able to meet interest Less able to meet interest Requirement 3 c Based on the ratios calculated in (a) and (b), would Company A be more likely to receive a higher or lower interest rate than the average borrowing rate in the industry multiple choice 3 Lower interest rate Higher interest rate

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The following information applies to the questions displayed below.] On January 1, Year 1, the general ledger of Company A includes the following account balances:

The following information applies to the questions displayed below.]

On January 1, Year 1, the general ledger of Company A includes the following account balances:

Accounts	Debit		Credit
Cash	$	12,900
Accounts Receivable		37,400
Inventory		153,700
Land		84,300
Buildings		137,000
Allowance for Uncollectible Accounts			$	3,500
Accumulated Depreciation				11,300
Accounts Payable				36,400
Common Stock				217,000
Retained Earnings				157,100
Totals	$	425,300	$	425,300

During January Year 1, the following transactions occur:

January 1		Borrow $117,000 from Company B Corporation. The installment note bears interest at 4% annually and matures in 5 years. Payments of $2,155 are required at the end of each month for 60 months.
January 4		Receive $32,700 from customers on accounts receivable.
January 10		Pay cash on accounts payable, $28,000.
January 15		Pay cash for salaries, $30,600.
January 30		Company A sales for the month total $198,000. Sales include $66,700 for cash and $131,300 on account. The cost of the units sold is $119,000.
January 31		Pay the first monthly installment of $2,155 related to the $117,000 borrowed on January 1. Round your interest calculation to the nearest dollar.

7. Analyze the following for Company A:

Requirement 1:

a-1. Calculate the debt to equity ratio.

a-2. If the average debt to equity ratio for the industry is 1, is Company A more or less leveraged than other companies in the same industry?

multiple choice 1

- Less leveraged

More leveraged

Requirement 2:

b-1. Calculate the times interest earned ratio.

b-1. 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?

multiple choice 2

More able to meet interest
Less able to meet interest

Requirement 3:

c. Based on the ratios calculated in (a) and (b), would Company A be more likely to receive a higher or lower interest rate than the average borrowing rate in the industry?

multiple choice 3