Question

Answer all please.

Financial Statements and Closing Entries The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. As of October 31, 2019, the end of the fiscal year, the accountant for The Gorman Group prepared an end-of-period spreadsheet, part of which follows:

The Gorman Group
End-of-Period Spreadsheet
For the Year Ended October 31, 2019

Adjusted Trial Balance

Account Title Dr Cr

Cash	11,520
Accounts Receivable	25,090
Supplies	3,920
Prepaid Insurance	8,470
Land	89,000
Buildings	321,000
Accumulated Depreciation-Buildings		104,400
Equipment	232,000
Accumulated Depreciation-Equipment		136,000
Accounts Payable		29,670
Salaries Payable		2,940
Unearned Rent		1,330
Nicole Gorman, Capital		381,540
Nicole Gorman, Drawing	22,300
Service Fees		423,160
Rent Revenue		4,470
Salaries Expense	303,370
Depreciation Expense—Equipment	16,500
Rent Expense	13,800
Supplies Expense	9,760
Utilities Expense	8,820
Depreciation Expense—Buildings	5,880
Repairs Expense	4,860
Insurance Expense	2,670
Miscellaneous Expense	4,550
	1,083,510	1,083,510

1. Prepare an income statement.

Gorman Group Income Statement For the Year Ended October 31, 2019
Revenues:
Service fees	$
Rent revenue
Total revenues		$
Expenses:
Salaries expense	$
Depreciation expense-equipment
Rent expense
Supplies expense
Utilities expense
Depreciation expense-buildings
Repairs expense
Insurance expense
Miscellaneous expense
Total expenses
Net income		$

Prepare a statement of owner's equity (no additional investments were made during the year).

Gorman Group Statement of Owner's Equity For the Year Ended October 31, 2019
Nicole Gorman, capital, November 1, 2018		$
Net income for the year	$
Withdrawals
Increase in owner's equity
Nicole Gorman, capital, October 31, 2019		$

Prepare a balance sheet.

Gorman Group Balance Sheet October 31, 2019
Assets				Liabilities
Current assets:				Current liabilities:
Cash		$		Accounts payable	$
Accounts receivable				Salaries payable
Supplies				Unearned rent
Prepaid insurance				Total liabilities		$
Total current assets			$
Property, plant, and equipment:				Owner's Equity
Land		$		Nicole Gorman, capital
Buildings	$
Less accumulated depreciation-buildings
Equipment	$
Less accumulated depreciation-equipment
Total property, plant, and equipment
Total assets			$	Total liabilities and owner's equity		$

2. Journalize the entries that were required to close the accounts at October 31. For a compound transaction, if an amount box does not require an entry, leave it blank.

Date	Account	Debit	Credit
Oct. 31	Service Fees
	Rent Revenue
	Salaries Expense
	Depreciation Expense—Equipment
	Rent Expense
	Supplies Expense
	Utilities Expense
	Depreciation Expense—Buildings
	Repairs Expense
	Insurance Expense
	Miscellaneous Expense
	Nicole Gorman, Capital
Oct. 31	Nicole Gorman, Capital
	Nicole Gorman, Drawing

3. If the balance of Nicole Gorman, Capital had instead increased $115,000 after the closing entries were posted and the withdrawals remained the same, what would have been the amount of net income or net loss?
$ Net Income

Answer 1

1.

427,630 Gorman Group Income Statement For the Year Ended October 31, 2019 Revenues: Service fees 423,160 Rent revenue 4.470 Total revenues Expenses: Salaries expense 303,370 Depreciation expense-equipment 16,500 Rent expense 13,800 Supplies expense 9,760 Utilities expense 8,820 Depreciation expense-buildings 5,880 Repairs expense 4,860 Insurance expense 2,670 Miscellaneous expense 4.550 Total expenses Net income 370 210 57.420

381540 Gorman Group Statement of Owner's Equity For the Year Ended October 31, 2019 Nicole Gorman, capital, November 1, 2018 Net income for the year 57,420 Withdrawals -22300 Increase in owner's equity Nicole Gorman, capital, October 31, 2019 35,120 416,660

Gorman Group Balance Sheet 31-Oct-19 Liabilities Current liabilities: $11,520 Accounts payable $25,090 Salaries payable $3,920 Unearned rent $8.470 Total liabilities $49,000 Owner's Equity $89,000 Nicole Gorman, capital $29,670 $2,940 $1,330 $33,940 Assets Current assets: Cash Accounts receivable Supplies Prepaid insurance Total current assets Property, plant, and equipment: Land Buildings $321,000 Less accumulated depreciation-buildings -$104.400 Equipment $232,000 Less accumulated depreciation equipment -$136.000 Total property, plant, and equipment Total assets $416,660 $216,600 $96.000 $401,600 $450.600 Total liabilities and owner's equity $450,600

2.

Date Account Debit Credit Oct. 31 423,160 4,470 Service Fees Rent Revenue Salaries Expense Depreciation Expense-Equipment Rent Expense Supplies Expense Utilities Expense Depreciation Expense–Buildings Repairs Expense Insurance Expense Miscellaneous Expense Nicole Gorman, Capital 303,370 16,500 13,800 9,760 8,820 5,880 4,860 2,670 4,550 57,420 Oct. 31 22,300 Nicole Gorman, Capital Nicole Gorman, Drawing 22,300

3.

Net income would remain same at 57,420.