The Baldwin Company currently has the following balances on their balance sheet:
ID: 2724656 • Letter: T
Question
The Baldwin Company currently has the following balances on their balance sheet:Total Liabilities $138,344
Common Stock $52,959
Retained Earnings $37,763
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 $250,566 $229,066 $280,566 $90,722
Cash Flow Statement Survey Andrews Baldwin Chester Digby Cash flows from operating activities Net Income (Loss) $22,118 ($1,852) $25,796 $743 Adjustment for non-cash items: Depreciation $7,415 $17,623 $10,277 $14,513 Extraordinary gains/losses/writeoffs $0 $0 $0 ($29) Changes in current assets and liabilities: Accounts payable ($742) $1,888 $436 $279 Inventory $10,792 ($4,647) $2,805 ($5,656) Accounts receivable ($1,256) ($2,624) ($2,818) $497 Net cash from operations $38,327 $10,387 $36,496 $10,348 Cash flows from investing activities Plant improvements (net) $0 ($48,580) ($37,000) ($14,800) Cash flows from financing activities Dividends paid $0 $0 $0 $0 Sales of common stock $5,000 $15,636 $0 $5,713 Purchase of common stock $0 $0 ($1,266) $0 Cash from long term debt issued $4,000 $22,790 $11,011 $0 Early retirement of long term debt $0 $0 $0 ($262) Retirement of current debt ($11,300) ($31,687) ($29,152) ($39,339) Cash from current debt borrowing $0 $24,826 $19,595 $26,492 Cash from emergency loan $0 $0 $0 $0 Net cash from financing activities ($2,300) $31,565 $188 ($7,396) Net change in cash position $36,027 ($6,628) ($316) ($11,847) Balance Sheet Survey Andrews Baldwin Chester Digby Cash $101,350 $24,826 $31,785 $34,750 Accounts Receivable $17,846 $13,326 $16,637 $10,769 Inventory $3,155 $14,397 $16,927 $11,704 Total Current Assets $122,351 $52,548 $65,349 $57,223 Plant and equipment $111,224 $264,340 $154,160 $217,700 Accumulated Depreciation ($65,954) ($87,822) ($59,375) ($91,142) Total Fixed Assets $45,270 $176,518 $94,785 $126,558 Total Assets $167,621 $229,066 $160,134 $183,780 Accounts Payable $10,955 $8,621 $9,855 $7,172 Current Debt $0 $24,826 $19,595 $26,492 Long Term Debt $23,909 $104,897 $37,300 $78,231 Total Liabilities $34,864 $138,344 $66,750 $111,894 Common Stock $27,081 $52,959 $9,999 $40,294 Retained Earnings $105,677 $37,763 $83,385 $31,592 Total Equity $132,757 $90,722 $93,384 $71,886 Total Liabilities & Owners' Equity $167,621 $229,066 $160,134 $183,780 Income Statement Survey Andrews Baldwin Chester Digby Sales $217,131 $162,128 $202,418 $131,018 Variable Costs (Labor, Material, Carry) $144,455 $101,973 $124,734 $83,004 Depreciation $7,415 $17,623 $10,277 $14,513 SGA (R&D, Promo, Sales, Admin) $17,898 $20,927 $13,479 $13,253 Other (Fees, Writeoffs, TQM, Bonuses) $9,950 $7,921 $6,820 $5,761 EBIT $37,413 $13,684 $47,108 $14,488 Interest (Short term, Long term) $2,691 $16,533 $6,612 $13,322 Taxes $12,153 ($997) $14,174 $408 Profit Sharing $451 $0 $526 $15 Net Profit $22,118 $36,500 $25,796 $743 The Baldwin Company currently has the following balances on their balance sheet:
Total Liabilities $138,344
Common Stock $52,959
Retained Earnings $37,763
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 $250,566 $229,066 $280,566 $90,722
Cash Flow Statement Survey Andrews Baldwin Chester Digby Cash flows from operating activities Net Income (Loss) $22,118 ($1,852) $25,796 $743 Adjustment for non-cash items: Depreciation $7,415 $17,623 $10,277 $14,513 Extraordinary gains/losses/writeoffs $0 $0 $0 ($29) Changes in current assets and liabilities: Accounts payable ($742) $1,888 $436 $279 Inventory $10,792 ($4,647) $2,805 ($5,656) Accounts receivable ($1,256) ($2,624) ($2,818) $497 Net cash from operations $38,327 $10,387 $36,496 $10,348 Cash flows from investing activities Plant improvements (net) $0 ($48,580) ($37,000) ($14,800) Cash flows from financing activities Dividends paid $0 $0 $0 $0 Sales of common stock $5,000 $15,636 $0 $5,713 Purchase of common stock $0 $0 ($1,266) $0 Cash from long term debt issued $4,000 $22,790 $11,011 $0 Early retirement of long term debt $0 $0 $0 ($262) Retirement of current debt ($11,300) ($31,687) ($29,152) ($39,339) Cash from current debt borrowing $0 $24,826 $19,595 $26,492 Cash from emergency loan $0 $0 $0 $0 Net cash from financing activities ($2,300) $31,565 $188 ($7,396) Net change in cash position $36,027 ($6,628) ($316) ($11,847) Balance Sheet Survey Andrews Baldwin Chester Digby Cash $101,350 $24,826 $31,785 $34,750 Accounts Receivable $17,846 $13,326 $16,637 $10,769 Inventory $3,155 $14,397 $16,927 $11,704 Total Current Assets $122,351 $52,548 $65,349 $57,223 Plant and equipment $111,224 $264,340 $154,160 $217,700 Accumulated Depreciation ($65,954) ($87,822) ($59,375) ($91,142) Total Fixed Assets $45,270 $176,518 $94,785 $126,558 Total Assets $167,621 $229,066 $160,134 $183,780 Accounts Payable $10,955 $8,621 $9,855 $7,172 Current Debt $0 $24,826 $19,595 $26,492 Long Term Debt $23,909 $104,897 $37,300 $78,231 Total Liabilities $34,864 $138,344 $66,750 $111,894 Common Stock $27,081 $52,959 $9,999 $40,294 Retained Earnings $105,677 $37,763 $83,385 $31,592 Total Equity $132,757 $90,722 $93,384 $71,886 Total Liabilities & Owners' Equity $167,621 $229,066 $160,134 $183,780 Income Statement Survey Andrews Baldwin Chester Digby Sales $217,131 $162,128 $202,418 $131,018 Variable Costs (Labor, Material, Carry) $144,455 $101,973 $124,734 $83,004 Depreciation $7,415 $17,623 $10,277 $14,513 SGA (R&D, Promo, Sales, Admin) $17,898 $20,927 $13,479 $13,253 Other (Fees, Writeoffs, TQM, Bonuses) $9,950 $7,921 $6,820 $5,761 EBIT $37,413 $13,684 $47,108 $14,488 Interest (Short term, Long term) $2,691 $16,533 $6,612 $13,322 Taxes $12,153 ($997) $14,174 $408 Profit Sharing $451 $0 $526 $15 Net Profit $22,118 $36,500 $25,796 $743
Explanation / Answer
Total Equity - $90,722 (Comprising Common Stock $ 52959 and Retained Earning $ 37763)
Total Liabilities - $138,344
Hence Total of Equity and Liabilities is - $ 229066
Total Asset side will also be $ 229066
Now in next year Baldwin Company generates net profit after payment of dividend - $ 21500 ($ 36500 - $ 15000)
Now Total Equity will be $ 112222 (Comprising Common Stock and retained earning as below)
Common Stock $ 52959 (this being unchanged)
Retained Earnings $ 59263 ($ 37763 + $ 21500)
Total Liabilities $138,344 (this being unchanged)
Hence Total of Equity and Liabilities now is $ 250566 ($ 112222 + $ 138344)
Thus Total Asset side will also be $ 250566
Hence 1st option is correct.
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