Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Audit Risk In The Operation Of EDF Financed Projects

Authors: Koffi Rufin Kouame

1st Edition

6205912651, 978-6205912652

More Books

Students also viewed these Accounting questions

Question

7. List behaviors to improve effective leadership in meetings

Answered: 1 week ago

Question

6. Explain the six-step group decision process

Answered: 1 week ago