Question 11 (3 points) 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 Rich Corporation, $100,000 of bonds paying 8.5% annually are outstanding. Income before interest and taxes is $50,000. How would Rich Corporation calculate the interest coverage (accrual basis) ratio? Income before interest and taxes divided by the interest expense. Income before interest and taxes divided by carrying value of the bonds outstanding. Income before interest and taxes divided by the face value on bonds. Face value of the bonds divided by income before interest and taxes. Previous Page Page 11 of 38 Question 12 (3 points) When bonds are issued by a company, the accounting entry shows an increase in liabilities and a decrease in stockholders' equity. increase in liabilities and an increase in stockholders' equity. increase in assets and an increase in liabilities. increase in assets and an increase in stockholders' equity. Question 13 (3 points) Par value represents the arbitrary amount that establishes a minimum price for the stock when it is first issued. current market price of the stock. amount for which any treasury shares have been acquired by the corporation. O amount for which treasury shares may be reissued