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9 November, 10:38

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

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  1. 9 November, 14:26
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    The correct option is the third one,$250,687

    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
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