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Calculating Total Assets

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?


Solution Preview

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 = ...

Solution Summary

This solution involves calculating the total assets liability common stock.