Answered step by step
Verified Expert Solution
Question
1 Approved Answer
invested $55,832,000 in plant and equipment last year. The plant investment was funded with bonds at a Company Baldwin tace value of $34,603,544 at 13.9%
invested $55,832,000 in plant and equipment last year. The plant investment was funded with bonds at a Company Baldwin tace value of $34,603,544 at 13.9% interest, and equity of $21,228,456. Depreciation is 15 years straight line. For this transaction alone which of the following statements are true? Select: 5 Cash went up when the Bond was issued by $34,603,544. O Cash was puiled from retained eamings to cover the $21,228,456 difference between the plant purchase and bond issue D Depreciation increased by $3,722,133. D Buying the plant had no net effect on the Cash account, because the plant was paid for by the bond plus retained earnings O On the Balance sheet, Plant &Equipment increased by $55,832.000. Cash went down by $55,832,000 when the plant was purchased. On the Balance sheet, Long Term Debt changed by $34,603,544. Since the new plant was funded with debt and equity, on the Balance sheet Retained Earnings decreased by $21.228,456, the difference between the investment $55,832,000 and the bond $34,603,544
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started