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please complete all parts of the question thanks Financial Statements and Closing Entries The Gorman Group...

please complete all parts of the question thanks

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 $12,910
Accounts Receivable 28,100
Supplies 4,390
Prepaid Insurance 9,480
Land 100,000
Buildings 359,000
Accumulated Depreciation-Buildings 116,900
Equipment 259,000
Accumulated Depreciation-Equipment 152,300
Accounts Payable 33,230
Salaries Payable 3,290
Unearned Rent 1,490
Nicole Gorman, Capital 426,230
Nicole Gorman, Drawing 24,900
Service Fees 473,900
Rent Revenue 5,000
Salaries Expense 339,740
Depreciation Expense—Equipment 18,400
Rent Expense 15,500
Supplies Expense 10,930
Utilities Expense 9,880
Depreciation Expense—Buildings 6,590
Repairs Expense 5,440
Insurance Expense 2,990
Miscellaneous Expense 5,090
1,212,340 1,212,340

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?
$

Solutions

Expert Solution

  • All working forms part of the answer
  • Income Statement

Gorman Group

Income Statement

For the Year Ended October 31, 2019

Revenues:

Service Fees

$     4,73,900.00

Rent Revenue

$          5,000.00

Total revenues

$   4,78,900.00

Expenses:

Salaries Expense

$     3,39,740.00

Depreciation Expense—Equipment

$        18,400.00

Rent Expense

$        15,500.00

Supplies Expense

$        10,930.00

Utilities Expense

$          9,880.00

Depreciation Expense—Buildings

$          6,590.00

Repairs Expense

$          5,440.00

Insurance Expense

$          2,990.00

Miscellaneous Expense

$          5,090.00

Total expenses

$   4,14,560.00

Net income

$      64,340.00

Gorman Group

Statement of Owner's Equity

For the Year Ended October 31, 2019

Beginning Balance

426230

Add: Net Income

64340

Balance

490570

Less: drawings

24900

Ending Balance

465670

  • Balance Sheet

Gorman Group

Balance Sheet

October 31, 2019

Assets

Liabilities

Current assets:

Current liabilities:

Cash

$      12,910.00

Accounts Payable

$           33,230.00

Accounts Receivable

$      28,100.00

Salaries Payable

$           3,290.00

Supplies

$       4,390.00

Unearned Rent

$            1,490.00

Prepaid Insurance

$       9,480.00

Total liabilities

$    38,010.00

Total current assets

$      54,880.00

Property, plant, and equipment:

Owner's Equity

Land

$   1,00,000.00

Ending Balance of Owner's Equity

$ 4,65,670.00

Buildings

$   3,59,000.00

Accumulated Depreciation-Buildings

$ (1,16,900.00)

$   2,42,100.00

Equipment

$   2,59,000.00

Accumulated Depreciation-Equipment

$ (1,52,300.00)

$   1,06,700.00

Total property, plant, and building

$   4,48,800.00

Total assets

$   5,03,680.00

Total liabilities and owner's equity

$ 5,03,680.00

  • Closing Journal Entries

Date

Account

Debit

Credit

Oct. 31

Service Fees

$   4,73,900.00

Rent Revenue

$       5,000.00

Nicole Gorman, Capital

$      64,340.00

Salaries Expense

$   3,39,740.00

Depreciation Expense—Equipment

$      18,400.00

Rent Expense

$      15,500.00

Supplies Expense

$      10,930.00

Utilities Expense

$       9,880.00

Depreciation Expense—Buildings

$       6,590.00

Repairs Expense

$       5,440.00

Insurance Expense

$       2,990.00

Miscellaneous Expense

$       5,090.00

Oct. 31

Nicole Gorman, Capital

$      24,900.00

Nicole Gorman, Drawing

$      24,900.00

  • Last Answer

Calculated Ending Capital Balance

$        4,65,670.00

Increased in Capital

$        1,15,000.00

New Capital

$        5,80,670.00

(-) Beginning Capital Balance

$        4,26,230.00

(+) Drawings

$            24,900.00

New Net Income would have been

$        1,79,340.00

Hence, The Net Income would have been $179,340.


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