How would most likely be classified on the balance sheet

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Problem 1: One way analysts measure the ability of a company to meet its obligations is to calculate the times interest earned ratio for any outstanding debt the company may have. For Tempo Solutions Corporation, $10,000 of bonds paying 6.5% annually is outstanding. Income before interest and taxes is $7,000. How would Tempo Solutions Corporation calculate the times interest earned ratio?

a. Income before interest and taxes divided by carrying value of the bonds outstanding
b. Income before interest and taxes divided by the interest expense
c. Face amount of bonds divided by income before interest and taxes
d. Income before interest and taxes divided by the face rate on bonds

Problem 2: Premium on Bonds Payable is a balance sheet item for Ohio Products Company. How would it most likely be classified on the balance sheet?

a. Revenue
b. Long-term asset
c. An increase to a long-term liability
d. Contra liability

Reference no: EM132826439

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