00:01
The baldwin company currently has the following balances on their balance sheet.
00:05
And we talk about assets, liabilities, and retained earnings right away, remembering retained earnings belongs in equity.
00:13
So i'm going to go ahead and set up the accounting equation because it's going to be important for us.
00:17
They start with 221 ,697 in assets, 135 ,429 in liabilities.
00:28
And they have retained earnings, which is a part of equity of 34 ,716.
00:35
There's a part of equity missing here, which is the common stock, because you can notice our accounting equation does not balance yet.
00:44
We are 51 ,552 short on the right side, and we're short because they haven't told us what our common stock is.
00:55
They left that missing for us to find out.
00:58
Now it says suppose the next year we generate 44 ,200 in profit and pay 12 ,000 in dividends.
01:09
Our total assets increased by 55 ,000 and liabilities remain unchanged.
01:16
So let's tickle the assets first...