Question

The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. As of October 31, 20Y9, 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, 20Y9
	Adjusted Trial Balance
Account Title	Dr.	Cr.
Cash	$11,170
Accounts Receivable	24,320
Supplies	3,800
Prepaid Insurance	8,210
Land	86,000
Buildings	311,000
Accumulated Depreciation-Buildings		101,200
Equipment	225,000
Accumulated Depreciation-Equipment		131,900
Accounts Payable		28,770
Salaries Payable		2,850
Unearned Rent		1,290
Common Stock		129,000
Retained Earnings		240,440
Dividends	21,600
Service Fees		410,210
Rent Revenue		4,330
Salaries Expense	294,080
Depreciation Expense-Equipment	16,000
Rent Expense	13,400
Supplies Expense	9,460
Utilities Expense	8,550
Depreciation Expense-Buildings	5,700
Repairs Expense	4,710
Insurance Expense	2,580
Miscellaneous Expense	4,410
	1,049,990	1,049,990

Required:

1. Prepare an income statement.

The Gorman Group Income Statement For the Year Ended October 31, 20Y9
Revenues:
	$fill in the blank 2
	fill in the blank 4
Total revenues		$fill in the blank 5
Expenses:
	$fill in the blank 7
	fill in the blank 9
	fill in the blank 11
	fill in the blank 13
	fill in the blank 15
	fill in the blank 17
	fill in the blank 19
	fill in the blank 21
	fill in the blank 23
Total expenses		fill in the blank 24
		$fill in the blank 26

Prepare a statement of stockholders’ equity. During the year, no additional Common stock was issued. If an amount box does not require an entry, leave it blank. If a Net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign.

The Gorman Group Statement of Stockholders’ Equity For the Year Ended October 31, 20Y9
	Common stock	Retained earnings	Total
	$fill in the blank 28	$fill in the blank 29	$fill in the blank 30
	fill in the blank 32	fill in the blank 33	fill in the blank 34
	fill in the blank 36	fill in the blank 37	fill in the blank 38
	$fill in the blank 40	$fill in the blank 41	$fill in the blank 42

Prepare a balance sheet.

The Gorman Group Balance Sheet October 31, 20Y9
Assets				Liabilities
Current assets:				Current liabilities:
		$fill in the blank 44			$fill in the blank 46
		fill in the blank 48			fill in the blank 50
		fill in the blank 52			fill in the blank 54
		fill in the blank 56		Total liabilities		$fill in the blank 57
Total current assets			$fill in the blank 58
Property, plant, and equipment:				Stockholders' Equity
		$fill in the blank 60			$fill in the blank 62
	$fill in the blank 64				fill in the blank 66
	fill in the blank 68
		fill in the blank 70
	$fill in the blank 72
	fill in the blank 74
		fill in the blank 76
Total property, plant, and equipment			fill in the blank 77	Total stockholders' equity		fill in the blank 78
Total assets			$fill in the blank 79	Total liabilities and stockholders' equity		$fill in the blank 80

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

Date	Account	Debit	Credit
20Y9 Oct. 31		fill in the blank 82	fill in the blank 83
		fill in the blank 85	fill in the blank 86
		fill in the blank 88	fill in the blank 89
		fill in the blank 91	fill in the blank 92
		fill in the blank 94	fill in the blank 95
		fill in the blank 97	fill in the blank 98
		fill in the blank 100	fill in the blank 101
		fill in the blank 103	fill in the blank 104
		fill in the blank 106	fill in the blank 107
		fill in the blank 109	fill in the blank 110
		fill in the blank 112	fill in the blank 113
		fill in the blank 115	fill in the blank 116
20Y9 Oct. 31		fill in the blank 118	fill in the blank 119
		fill in the blank 121	fill in the blank 122

3. If the balance of Retained earnings had instead increased $30,200 after the closing entries were posted, and the dividends remained the same, what would have been the amount of Net income or Net loss? Enter all amounts as positive numbers.
$______

Answer 1

1.

2.

3.

If the balance of Retained earnings had instead increased $30,200 after the closing entries were posted, and the dividends remained the same, the amount of Net income = $30,200

Workings

1. Income Statement shows revenues and expenses of a business for a period of time.

Statement of Stockholders’ Equity shows how the different equity components have moved over the period.

Balance Sheet shows the assets, liabilities and equity of a business on a specific date

2.Journal entries that were required to close the accounts include closing of all temporary accounts including revenues, expenses and dividends account.

3. If the dividends had remained the same and the balance in retained earnings would have increased by $30,200 this income would have solely been on account of net income. Hence, amount of net income would have been $30200

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