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The Baldwin Company currently has the following balances on their balance sheet: Total Liabilities                      $147,704 Common...

The Baldwin Company currently has the following balances on their balance sheet:

Total Liabilities                      $147,704
Common Stock                     $56,998
Retained Earnings               $47,919

Suppose next year the Baldwin Company generates $36,500 in net profit and pays $15,000 in dividends and total liabilities and common stock remain unchanged. What must their total assets be next year?
Select: 1
$274,121
$304,121
$252,621
$104,916
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Homework Answers

Answer #1

Net increase in retained earnings net year-

Net profit - dividend paid = $36500-$15000 = $21500

So, total earnings at the end of next year -

Opening retained earnings + Net increase in retained earnings = $47919+21500 = $69419

Total liabilities = Assets-common stock - retained earnings

$147704 = Assets-$56998 -$47919

Assets = $252621 = answer , option C is correct.

I have explained step by step , if you still face doubt , please comment in the box. Thank you

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