Balance sheet and income statement data indicate the following: Company A
Company B
Bonds payable, 8%, 24-year bonds
Income before income tax for year
$1,200,000
$900,000
495,000
130,000
Income tax for year
75,000
12,000
Interest payable
50,000
Interest receivable
21,000
28,000
a. For each company, what is the times interest earned ratio? (Round to one decimal place.)
Company A
Company B
b. Which company gives potential creditors more protection?

Grant, inc., acquired 30% of south co.’s voting stock for $200,000 on january 2, year 1, and did not elect the fair value option. the price equaled the carrying amount and the fair value of the interest purchased in south’s net assets. grant’s 30% interest in south gave grant the ability to exercise significant influence over south’s operating and financial policies. during year 1, south earned $80,000 and paid dividends of $50,000. south reported earnings of $100,000 for the 6 months ended june 30, year 2, and $200,000 for the year ended december 31, year 2. on july 1, year 2, grant sold half of its stock in south for $150,000 cash. south paid dividends of $60,000 on october 1, year 2. before income taxes, what amount should grant include in its year 1 income statement as a result of the investment?