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Company Baldwin invested $35,640,000 in plant and equipment last year. The plant investment was funded with bonds at a face value of $26,131,576 at 13.9%
Company Baldwin invested $35,640,000 in plant and equipment last year. The plant investment was funded with bonds at a face value of $26,131,576 at 13.9% interest, and equity of $9,508,424. Depreciation is 15 years straight line. For this transaction alone which of the following statements are true?Select: 5
On the Balance sheet, Long Term Debt changed by $26,131,576. | |
Since the new plant was funded with debt and equity, on the Balance sheet Retained Earnings decreased by $9,508,424, the difference between the investment $35,640,000 and the bond $26,131,576. | |
On the Balance sheet, Plant & Equipment increased by $35,640,000. | |
Depreciation increased by $2,376,000. | |
Buying the plant had no net effect on the Cash account, because the plant was paid for by the bond plus retained earnings. | |
Cash went down by $35,640,000 when the plant was purchased. | |
Cash was pulled from retained earnings to cover the $9,508,424 difference between the plant purchase and bond issue. | |
Cash went up when the Bond was issued by $26,131,576. |
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