Use the following information from separate companies a through f to compute

| February 25, 2017

Question
1. Use the following information from separate companies a through f to compute times interest earned. Which company indicates the strongest ability to pay interest expense as it comes due?

Net Income (Loss)

Interest Expense

Income Taxes

a.

$140,000

$48,000

$ 35,000

b.

140,000

15,000

50,000

c.

140,000

8,000

70,000

d.

265,000

12,000

130,000

e.

79,000

12,000

30,000

f.

(4,000)

12,000

0

2. Tony Newbern, an unmarried employee, works 48 hours in the week ended January 12. His pay rate is $12 per hour, and his wages are subject to no deductions other than FICA — Social Security, FICA — Medicare, and federal income taxes. He claims two withholding allowances. Compute his regular pay, overtime pay (for this company, workers earn 150% of their regular rate for hours in excess of 40 per week), and gross pay. Then compute his FICA tax deduction (use 6.2% for the Social Security portion and 1.45% for the Medicare portion), income tax deduction (use the wage bracket withholding table of Exhibit 11A.6), total deductions, and net pay. (Round tax amounts to the nearest cent.)

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