Question

The Baldwin company currently has the following balances on their balance sheet: Assets $180,506 Common Stock $11,365 Retained earnings $92,472 Suppose next year the Baldwin Company generates $20,000 in net profit, pays $10,000 in dividends, assets change to $151,000, and common stock remains unchanged. What must their total liabilities be next year?

Answer 1

The total liabilities for the next year amount to 37163 $.

Step-by-step explanation:

To calculate the liability we will use the simple equation given below.

Asset-equity=liability

Assets-RE=Liability

Current year Change* Next Year

Assets 180,506.00 29,506.00 151,000.00

Common Stock (11,365.00) 0 (11,365.00)

Retain Earning (92,472.00) (10,000.00) (102,472.00)

Liability- BaL figure 76,669.00 37,163.00

*Retain earning= Net profit- dividend

Hence balancing figure that is 37,163 dollars is liabilty for next year,