Question

The Gorman Group End-of-Period Spreadsheet For the Year Ended October 31, 2019
	Adjusted Trial Balance
Account Title	Dr.	Cr.
Cash	$18,230
Accounts Receivable	39,680
Supplies	6,200
Prepaid Insurance	13,390
Land	141,000
Buildings	507,000
Accumulated Depreciation-Buildings		165,200
Equipment	366,000
Accumulated Depreciation-Equipment		215,100
Accounts Payable		46,930
Salaries Payable		4,650
Unearned Rent		2,110
Nicole Gorman, Capital		601,760
Nicole Gorman, Drawing	35,200
Service Fees		669,290
Rent Revenue		7,070
Salaries Expense	479,820
Depreciation Expense—Equipment	26,000
Rent Expense	21,800
Supplies Expense	15,440
Utilities Expense	13,950
Depreciation Expense—Buildings	9,300
Repairs Expense	7,690
Insurance Expense	4,220
Miscellaneous Expense	7,190
	1,712,110	1,712,110

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?
$

Answer 1

1. Gorman Group

Income Statement

For the year ended October 31, 2019

	$	$
Revenues
Service Fees	669,290
Rent Revenue	7,070
Total Revenues		676,360
Expenses
Salaries Expense	479,820
Depreciation Expense : Equipment	26,000
Rent Expense	21,800
Supplies Expense	15,440
Utlities Expense	13,950
Depreciation Expense : Buildings	9,300
Repairs Expense	7,690
Insurance Expense	4,220
Miscellaneous Expense	7,190
Total Expense		585,410
Net Income		90,950

Gorman Group

Statement of Owners' Equity

For the year ended October 31, 2019

		$
Nicole Gorman, Capital, November 1, 2018		601,760
Net Income	$ 90,950
Less: Nicole Gorman, Drawing	35,200	55,750
Nicole Gorman, Capital, October 31, 2019		657,510

Gorman Group

Balance Sheet

October 31, 2019

Assets	$	$	Liabilities and Owners' Equity	$	$
Current Assets			Current Liabilities
Cash	18,230		Accounts Payable	46,930
Accounts Receivable	39,680		Salaries Payable	4,650
Supplies	6,200		Unearned Rent	2,110
Prepaid Insurance	13,390		Total Current Liabilities		53,690
Total Current Assets		77,500
Property Plant and Equipment			Owners' Equity
Land	141,000		Nicole Gorman, Capital		657,510
Buildings	507,000
Accumulated Depreciation: Buildings	(165,200)
Equipment	366,000
Accumulated Depreciation : Equipment	(215,100)
Total Property Plant and Equipment		633,700
Total Assets		711,200	Total Liabilities and Owner's Equity		711,200

2.

Date	Account	Debits	Credits
		$	$
October 31	Service Fees	669,290
	Rent Revenue	7,070
	Income Summary		676,360
	To close the revenue accounts
October 31	Income Summary	585,410
	Salaries Expense		479,820
	Depreciation Expense: Equipment		26,000
	Rent Expense		21,800
	Supplies Expense		15,440
	Utilities Expense		13,950
	Depreciation Expense: Buildings		9,300
	Repairs Expense		7,690
	Insurance Expense		4,220
	Miscellaneous Expense		7,190
	To close expense accounts
October 31	Income Summary	90,950
	Nicole Gorman, Capital		90,950
	To close income summary
October 31	Nicole Gorman, Capital	35,200
	Nicole Gorman, Drawings		35,200
	To close drawings account

3. Net income = $ 115,000 + $ 35,200 = $ 150,200