Question

Please solve for yellow highlighted ? and show work

Problem V: The following are condensed financial statements for Talley Inc. for the month of August. Solve for all spots marked with a "?". You may either write or type your answers over the question marks or enter them in the chart on the next page. $ 200,000 Talley Inc. Income Statement For the month ended August 31, 20X1 Service revenue Expenses: Salaries expense $ 60,000 Rent expense Insurance expense 7,000 Utilities expense 2,000 Miscellaneous expense 1,000 Total expenses Net Income Talley Inc. Statement of Stockholders' Equity For the month ended August 31, 20X1 Common Stock $ 15,000 6,000 Retained Earnings $ 23,000 Beginning balances - Aug 1 Add: New stock issuances Add: Net income Less: Dividends Ending balances - Aug 31 Total Stockholders' Equity $ 38,000 6,000 110,000 $ 124.000 110,000 $ $ 21.000 Talley Inc. Balance Sheet at August 31, 20X1 Assets: Cash Supplies Equipment Land $ ? 4,000 90,000 40,000 Liabilities: Accounts Payable Salaries Payable Notes Payable 1,000 30,000 Total Liabilities Owners' Equity Common Stock Retained Earnings Total Stockholders' Equity $21,000 124.000 Total Assets Total Liabilities & Stockholders' Equity $164.000

Answer 1

Answer -

Income Statement:
Rent expense	$20000
Total Expenses	$90000
Net income	$110000
Statement of stockholders equity:
Dividends	$30000
Ending retained earnings (Aug 31)	$103000
Balance sheet:
Cash	$30000
Total assets	$164000
Accounts payable	$9000
Total liabilities	$40000
Retained earnings	$103000

Calculation:

1. Net income:

Here, net income of Talley Inc. for the month of August is already given in the statement of shareholders equity.

So, Net income = $110000 (given)

2. Total expenses:

Net income = Service revenue - Total expenses

So,

Total expenses = Service revenue - Net income

Total expenses = $200000 - $110000

Total expenses = $90000

3. Rent expense:

Here,

Total expenses = Salaries expense + Rent expense + Insurance expense + Utilities expense + Miscellaneous expense

So,

Rent expense = Total expenses - (Salaries expense + Insurance expense + Utilities expense + Miscellaneous expense)

Rent expense = $90000 - ($60000 + $7000 + $2000 + $1000)

Rent expense = $20000

4. Dividends:

Total stockholders equity (Ending balance) = Total stockholders equity (Beginning balance) + New stock issuance + Net income - Dividends

Therefore,

Dividends = Total stockholders equity (Beginning balance) + New stock issuance + Net income - Total stockholders equity (Ending balance)

Dividends = $38000 + $6000 + $110000 - $124000

Dividends = $30000

5. Ending retained earnings (Aug 31):

Ending retained earnings (Aug 31) = Beginning retained earnings (Aug 01) + Net income - Dividends

Ending retained earnings (Aug 31) = $23000 + $110000 - $30000

Ending retained earnings (Aug 31) = $103000

6. Total assets:

In order for the balance sheet to balance, total liabilities and stockholders' equity must be equal to the total assets.

So,

Total assets = Total liabilities and stockholders equity

Therefore, Total assets = $164000

7. Cash:

Here,

Total assets = Cash + Supplies + Equipment + Land

Therefore,

Cash = Total assets - (Supplies + Equipment + Land)

Cash = $164000 - ($4000 + $90000 + $40000)

Cash = $30000

8. Total liabilities:

Total liabilities and stockholders equity = Total liabilities + Total stockholders equity

So,

Total liabilities = Total liabilities and stockholders equity - Total stockholders equity

Total liabilities = $164000 - $124000

Total liabilities = $40000

9. Accounts payable:

Here,

Total liabilities = Accounts payable + Salaries payable + Note payable

So,

Accounts payable = Total liabilities - (Salaries payable + Note payable)

Accounts payable = $40000 - ($1000 + $30000)

Accounts payable = $9000

10. Retained earnings:

Total stockholders equity = Common stock + Retained earnings

Therefore,

Retained earnings = Total stockholders equity - Common stock

Retained earnings = $124000 - $21000

Retained earnings = $103000