Question

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	$11,470
Accounts Receivable	24,960
Supplies	3,900
Prepaid Insurance	8,420
Land	89,000
Buildings	319,000
Accumulated Depreciation-Buildings		103,900
Equipment	230,000
Accumulated Depreciation-Equipment		135,300
Accounts Payable		29,520
Salaries Payable		2,930
Unearned Rent		1,330
Nicole Gorman, Capital		378,780
Nicole Gorman, Drawing	22,200
Service Fees		421,010
Rent Revenue		4,450
Salaries Expense	301,820
Depreciation Expense—Equipment	16,400
Rent Expense	13,700
Supplies Expense	9,710
Utilities Expense	8,780
Depreciation Expense—Buildings	5,850
Repairs Expense	4,840
Insurance Expense	2,650
Miscellaneous Expense	4,520
	1,077,220	1,077,220

Required:

1. Prepare an income statement.

Prepare a statement of owner's equity (no additional investments were made during the year.)

Prepare a balance sheet.

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.

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