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Business, 30.03.2020 23:07 wednesdayA

On January 1, Loring Company purchased new machinery costing $400,000 on a note payable with equal payments due at the end of each of the next 5 years at a rate of interest equal to 8%. The machinery is expected to last 10 years, and Loring uses straight-line depreciation. What impact will this have on the December 31 cash balance? a. The cash balance will be $40,000 lower because of depreciation expense. b. The cash balance will not be affected. c. The cash balance will be $400,000 higher because of borrowing on the note payable. d. The cash balance will be $80,000 lower because of depreciation expense. e. None of these choices are correct.

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