Final answer:
The ending balance in common stock for Baldwin Company next year, after accounting for net profit, dividends paid, and changes in total assets, will be $31,534. Therefore correct option is A
Step-by-step explanation:
To calculate the ending balance in common stock for Baldwin Company next year, we need to take into consideration the provided financial figures and changes that will occur. The formula for equity is:
Equity = Total Assets - Total Liabilities
We begin with the current figures:
- Total Assets: $155,422
- Total Liabilities: $64,341
- Retained Earnings: $82,347
Next year, the Baldwin Company projects the following:
- Net Profit: $44,200
- Dividends Paid: $12,000
- Increase in Total Assets: $55,000
To find the Retained Earnings at the end of next year, we use the formula:
Retained Earningsend = Retained Earningsbeginning + Net Profit - Dividends Paid
Retained Earningsend = $82,347 + $44,200 - $12,000
= $114,547
Since Total Liabilities remain the same and Total Assets increase by $55,000:
Total Assetsend = $155,422 + $55,000
= $210,422
Now, we calculate the Equity at the end of next year:
Equityend = Total Assetsend - Total Liabilities
= $210,422 - $64,341
= $146,081
Given that Equity is composed of Retained Earnings and Common Stock, we can find the Common Stock value:
Common Stock = Equityend - Retained Earningsend
= $146,081 - $114,547
= $31,534
Therefore, the ending balance in common stock for Baldwin Company next year will be $31,534.