Question

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	$15,670
Accounts Receivable	34,110
Supplies	5,330
Prepaid Insurance	11,510
Land	121,000
Buildings	436,000
Accumulated Depreciation-Buildings		142,000
Equipment	315,000
Accumulated Depreciation-Equipment		185,000
Accounts Payable		40,350
Salaries Payable		4,000
Unearned Rent		1,810
Nicole Gorman, Capital		517,670
Nicole Gorman, Drawing	30,300
Service Fees		575,370
Rent Revenue		6,080
Salaries Expense	412,490
Depreciation Expense—Equipment	22,400
Rent Expense	18,800
Supplies Expense	13,270
Utilities Expense	11,990
Depreciation Expense—Buildings	8,000
Repairs Expense	6,610
Insurance Expense	3,620
Miscellaneous Expense	6,180
	1,472,280	1,472,280

Required:

1. Prepare an income statement.

Gorman Group Income Statement For the Year Ended October 31, 2019
Revenues:
	$
Total revenues		$
Expenses:
	$
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
		$
	$
		$

Prepare a balance sheet.

Gorman Group Balance Sheet October 31, 2019
Assets				Liabilities
Current assets:				Current liabilities:
		$			$
				Total liabilities		$
Total current assets			$
Property, plant, and equipment:				Owner's Equity
	$
Total property, plant, and building
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
Oct. 31

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?
$

Answer 1