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Company Baldwin invested $20,200,000 in plant and equipment last year. The plant investment was funded with bonds at a face value of $15,739,873 at 12.3%
Company Baldwin invested $20,200,000 in plant and equipment last year. The plant investment was funded with bonds at a face value of $15,739,873 at 12.3% interest, and equity of $4,460,127. Depreciation is 15 years straight line. For this transaction alone which of the following statements are true? Can pick multiple
Cash went up when the Bond was issued by $15,739,873. | ||
On the Balance sheet, Long Term Debt changed by $15,739,873. | ||
Since the new plant was funded with debt and equity, on the Balance sheet Retained Earnings decreased by $4,460,127, the difference between the investment $20,200,000 and the bond $15,739,873. | ||
Cash went down by $20,200,000 when the plant was purchased. | ||
Cash was pulled from retained earnings to cover the $4,460,127 difference between the plant purchase and bond issue. | ||
On the Balance sheet, Plant & Equipment increased by $20,200,000. | ||
Buying the plant had no net effect on the Cash account, because the plant was paid for by the bond plus retained earnings.
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