In: Accounting
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?
$
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 |
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 |
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 |
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.