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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	$11,000
Accounts Receivable	28,150
Supplies	6,350
Prepaid Insurance	9,500
Land	75,000
Buildings	250,000
Accumulated Depreciation-Buildings		117,200
Equipment	240,000
Accumulated Depreciation-Equipment		151,700
Accounts Payable		33,300
Salaries Payable		3,300
Unearned Rent		1,500
Nicole Gorman, Capital		220,000
Nicole Gorman, Drawing	20,000
Service Fees		468,000
Rent Revenue		5,000
Salaries Expense	291,000
Depreciation Expense—Equipment	17,500
Rent Expense	15,500
Supplies Expense	9,000
Utilities Expense	8,500
Depreciation Expense—Buildings	6,600
Repairs Expense	3,450
Insurance Expense	3,000
Miscellaneous Expense	5,450
	1,000,000	1,000,000

Required:

1. Prepare an income statement.

The 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.)

The 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.

The 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
Equipment	$
Less accumulated depreciation
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.

Answer 1

	. Income Statement.
	The Gorman Group
	Income Statement
	For the Year Ended October 31, 2019
	Revenues:
	Service fees	468,000
	Rent revenue	5,000
	Total Revenues		473,000
	Expenses:
	Salaries expense	291,000
	Depreciation expense-equipment	17,500
	Rent expense	15,500
	Supplies expense	9,000
	Utilities expense	8,500
	Depreciation expense-buildings	6,600
	Repairs expense	3,450
	Insurance expense	3,000
	Miscellaneous expense	5,450
	Total Expenses		360,000
	Net income		113,000		0
	Prepare a statement of owner's equity (no additional investments were made during the year.)
	The Gorman Group
	Statement of Owner's Equity
	For the Year Ended October 31, 2019
	Nicole Gorman, capital, November 1, 2018		220,000
	Net income for the year	$	113,000
	Withdrawals	20,000
	Increase in owner's equity		93,000
	Nicole Gorman, capital, October 31, 2019		313,000
	balance sheet.
	The Gorman Group
	Balance Sheet
	31-Oct-19
	Assets				Liabilities
	Current assets:				Current liabilities:
	Cash	$11,000	$		Accounts payable	33,300
	Accounts receivable	28,150			Salaries payable	3,300
	Supplies	6,350			Unearned rent	1,500
	Prepaid insurance	9,500			Total liabilities		38,100
	Total current assets		$55,000	$
	Property, plant and equipment				Owner's Equity
	Land	75,000	$		Nicole Gorman, capital		313,000
	Buildings	250,000
	Less accumulated depreciation	$     (117,200)
	Equipment	240,000
	Less accumulated depreciation	$     (151,700)
	Total plant and property and equipment		$296,100
	Total assets			$351,100	Total liabilities and owner's equity	351,100
	JOURNAL ENTRIES FOR ACCOUNT CLOSING
Date	Account Titles and explanations	Debit	Credit
October 31,2019	Depreciation rxpense-Building	6,600
	Accumulated depreciation -Building		6,600
	(To record depreciation expense of building)
October 31,2019	Depreciation rxpense-Building	17,500
	Accumulated depreciation -equipment		17,500
	(To record depreciation expense of equipment)
October 31,2019	Supplies expense	9,000
	Supplies		9,000
	(To record supplies expenses)
October 31,2019	Insurance expense	3,000
	Prepaid insurance		3,000
	(To record insurance expenses)
October 31,2019	Unearned rent	5,000
	Rent revenue		5,000
	(To record rent revenue earned)