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The baldwin company currently has the following balances on their balance sheet: total assets $155,422 total liabilities $64,341 retained earnings $82,347 suppose next year the baldwin company generates $44,200 in net profit, pays $12,000 in dividends, total assets increase by $55,000, and total liabilities remain unchanged. what will ending baldwins balance in common stock be next year? select : 1 save answer

O $31,534
O $95,934
O $357,110
O $160,216

User Rid
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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.

User Pankaj Sati
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