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, 20Y3, 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, 20Y3
	Adjusted Trial Balance
Account Title	Dr.	Cr.
Cash	16,260
Accounts Receivable	35,390
Supplies	5,530
Prepaid Insurance	11,940
Land	126,000
Buildings	452,000
Accumulated Depreciation-Buildings		147,300
Equipment	327,000
Accumulated Depreciation-Equipment		191,900
Accounts Payable		41,860
Salaries Payable		4,150
Unearned Rent		1,880
Nicole Gorman, Capital		537,380
Nicole Gorman, Drawing	31,400
Service Fees		596,960
Rent Revenue		6,300
Salaries Expense	427,970
Depreciation Expense—Equipment	23,200
Rent Expense	19,500
Supplies Expense	13,770
Utilities Expense	12,440
Depreciation Expense—Buildings	8,300
Repairs Expense	6,860
Insurance Expense	3,760
Miscellaneous Expense	6,410
	1,527,730	1,527,730

Required:

1. Prepare an income statement.

Gorman Group Income Statement For the Year Ended October 31, 20Y3
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, 20Y3
		$
	$
		$

Prepare a balance sheet.

Gorman Group Balance Sheet October 31, 20Y3
Assets				Liabilities
Current assets:				Current liabilities:
		$			$
				Total liabilities		$
Total current assets			$
Property, plant, and equipment:				Owner's Equity
		$
	$
	$
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. 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

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