Question

Consider the following potential events that might have occurred to Global on December​ 30, 2013. For each​ one, indicate which line items in​ Global's balance sheet would be affected and by how much. Also indicate the change to​ Global's book value of equity.
a. Global used $ 19.3 million of its available cash to repay $ 19.3 million of its​ long-term debt.
b. A warehouse fire destroyed $ 4.9 million worth of uninsured inventory.
c. Global used $ 5.1 million in cash and $ 5.2 million in new​ long-term debt to purchase a $ 10.3 million building.
d. A large customer owing $ 2.8 million for products it already received declared​ bankruptcy, leaving no possibility that Global would ever receive payment.
e. ​Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by more than 45 % . f. A key competitor announces a radical new pricing policy that will drastically undercut​ Global's prices

Answer 1

The correct answer is A