In a recent year Luke Corporation had net income of 250000 i

In a recent year Luke Corporation had net income of $250000, interest expense of $50000, and a times interest earned of 10. What was Luke Corporation\'s income before taxes for the year? $550000 $500000 $450000 None of these answer choices are correct.

Solution

1) calculate Income before tax :

Income before interest and tax = 50000*10 = 500000

Income before tax = 500000-50000 = $450000

So answer is c) $450000

2) An unrealized loss account on available for sale securities is

So answer is a) reported as a separate component of stockholder\'s equity