QUESTION 6

1. Balance sheet as of end of 2005			Balance sheet as of end of 2006
   Cash $5	Current Liab $5		Cash $10	Current Liab $5
   A/R $5	Long Term Debt $15		A/R $5	Long Term Debt $25
   	Common Stock $20			Common Stock $15
   PP&E $40	R/E $10		PP&E $40	R/E $10
   Assets $50	Total $50		Assets $55	Total $55
   Income statement for 2006
   Sales	$100
   Costs	80
   Depreciation	5
   Interest	5
   Net Income	$10
   Dividends = $10; R/E=$0

   What type of transaction the firm was involved in 2006?

   I. The firm borrowed more, and was involved in new equity (share) issuance.

   II. The firm borrowed more and used some of its proceeds from borrowing to repurchase equity shares.

   III. The firm borrowed more and put all proceeds from borrowing on the firm's cash account.

   		Ionly
   		II only
   		I and III only
   		I and II only
   		All of the above