question archive Company Baldwin invested $32,300,000 in plant and equipment last year
Company Baldwin invested $32,300,000 in plant and equipment last year
Subject:FinancePrice: Bought3
Company Baldwin invested $32,300,000 in plant and equipment last year. The plant investment was funded with bonds at a face value of $20,292,757 at 12.2% interest, and equity of $12,007,243. Depreciation is 15 years straight line. For this transaction alone which of the following statements are true?
Select : 5
1)On the Balance sheet, Plant & Equipment increased by $32,300,000.
2) On the Balance sheet, Long Term Debt changed by $20,292,757.
3) Since the new plant was funded with debt and equity, on the Balance sheet Retained Earnings decreased by $12,007,243, the difference between the investment $32,300,000 and the bond $20,292,757.
4) Depreciation increased by $2,153,333.
5) Buying the plant had no net effect on the Cash account, because the plant was paid for by the bond plus retained earnings.
6) Cash went up when the Bond was issued by $20,292,757.
7) Cash went down by $32,300,000 when the plant was purchased.
8) Cash was pulled from retained earnings to cover the $12,007,243 difference between the plant purchase and bond issue.
