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Multiple Choices Company Baldwin invested $24,700,000 in plant and equipment last year. The plant investment was funded with bonds at a face value of $17,105,076
Multiple Choices Company Baldwin invested $24,700,000 in plant and equipment last year. The plant investment was funded with bonds at a face value of $17,105,076 at 11.6% interest, and equity of $7,594,924. 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 $17,105,076. |
Cash went down by $24,700,000 when the plant was purchased. |
On the Balance sheet, Long Term Debt changed by $17,105,076. |
Buying the plant had no net effect on the Cash account, because the plant was paid for by the bond plus retained earnings. |
On the Balance sheet, Plant & Equipment increased by $24,700,000. |
Depreciation increased by $1,646,667. |
Cash was pulled from retained earnings to cover the $7,594,924 difference between the plant purchase and bond issue. |
Since the new plant was funded with debt and equity, on the Balance sheet Retained Earnings decreased by $7,594,924, the difference between the investment $24,700,000 and the bond $17,105,076. |
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