The Baldwin Company currently has the following balances on their balance sheet:
Total Liabilities $138,888
Common Stock $55,651
Retained Earnings $43,516
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?
Next year, Baldwin Company's increase in Retained Earnings is:
Net profit - Dividends = $36,500 - $15,000 = $21,500
Hence, next year's Retained Earnings = ...
This solution involves calculating the total assets liability common stock.