Question

The Baldwin Company currently has the following balances on their balance sheet: Total Liabilities $135,759 Common Stock $52,705 Retained Earnings $40,723 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 $229,187 $93,429 $250,687 $280,687

Answer 1

The correct option is the third one,$250,687

Step-by-step explanation:

The key to ascertaining is accounting equation which that assets equal capital plus liabilities.

This implies that by determining the capital and liabilities,total assets sorted out.

Common stock $52,705

*Retained earnings for the year $62,223

Total equity and retained earnings $114,928

total liabilities $135,759

Total equity and liabilities $250,687

Total assets=total equity and liabilities=$250,687

Retained earnings for the year=prior year retained earnings+net profit-dividends paid

prior year retained earnings $40,723

net profit is $36,500

dividends is $15,000

*retained earnings for the year=$40,723+$36,500-$15,000=$62223