Answer:
Their total assets next year has to be $124,725
Explanation:
Step 1: Determine the initial assets and liabilities
The total assets can be expressed as;
A=C+E
where;
A=total assets
C=common stock
E=retained earnings
In our case;
A=unknown
C=$12,173
E=$91,949
replacing;
A=12,173+91,949=$104,122
Step 2: Determine total liabilities
Total liabilities=initial liability+dividends
where;
Initial liability=$73,225
dividends=$15,000
replacing;
Total liabilities=73,225+15,000=$88,225
Step 3: Determine new assets
Using the formula;
Net profit=new assets-total liabilities
where;
Net profit=$36,500
new assets=unknown=n
total liabilities=$88,225
replacing;
36,500=n-88,225
n=36,500+88,225=$124,725
n=$124,725
Their total assets next year has to be $124,725
