1. Financial Statements and Closing Entries

   The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. As of October 31, 20Y3, 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, 20Y3
   	Adjusted Trial Balance
   Account Title	Dr.	Cr.
   Cash	14,910
   Accounts Receivable	32,450
   Supplies	5,070
   Prepaid Insurance	10,950
   Land	115,000
   Buildings	415,000
   Accumulated Depreciation-Buildings		135,100
   Equipment	300,000
   Accumulated Depreciation-Equipment		175,900
   Accounts Payable		38,380
   Salaries Payable		3,800
   Unearned Rent		1,720
   Nicole Gorman, Capital		492,920
   Nicole Gorman, Drawing	28,800
   Service Fees		547,310
   Rent Revenue		5,780
   Salaries Expense	392,370
   Depreciation ExpenseEquipment	21,300
   Rent Expense	17,800
   Supplies Expense	12,620
   Utilities Expense	11,410
   Depreciation ExpenseBuildings	7,610
   Repairs Expense	6,290
   Insurance Expense	3,450
   Miscellaneous Expense	5,880
   	1,400,910	1,400,910

   Required:

   1. Prepare an income statement.

   Gorman Group Income Statement For the Year Ended October 31, 20Y3
   Revenues:
   Insurance expenseMiscellaneous expenseNicole Gorman, capitalService feesSupplies expense	$fill in the blank 2
   Rent expenseRent revenueRepairs expenseUtilities expenseUnearned rent	fill in the blank 4
   Total revenues		$fill in the blank 5
   Expenses:
   BuildingsCashRent revenueSalaries expenseSalaries payable	$fill in the blank 7
   Accumulated depreciation-equipmentDepreciation expense-equipmentEquipmentLandNicole Gorman, capital	fill in the blank 9
   Accounts payableRent expenseRent revenueService feesUnearned rent	fill in the blank 11
   Accounts receivableNicole Gorman, capitalRent revenueSuppliesSupplies expense	fill in the blank 13
   Nicole Gorman, capitalRent revenueService feesUtilities expenseUnearned rent	fill in the blank 15
   Accumulated depreciation-buildingsBuildingsDepreciation expense-buildingsEquipmentLand	fill in the blank 17
   Accounts payableNicole Gorman, capitalRent revenueRepairs expenseSalaries payable	fill in the blank 19
   Accounts receivableCashInsurance expensePrepaid insuranceRent revenue	fill in the blank 21
   Accumulated depreciation-buildingsBuildingsMiscellaneous expenseService feesUnearned rent	fill in the blank 23
   Total expenses		fill in the blank 24
   Net income		$fill in the blank 25

   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, 20Y3
   Increase in owner's equityNet income for the yearNicole Gorman, capital, November 1, 20Y2Nicole Gorman, capital, October 31, 20Y3Withdrawals		$fill in the blank 27
   Increase in owner's equityNet income for the yearNicole Gorman, capital, November 1, 20Y2Nicole Gorman, capital, October 31, 20Y3Withdrawals	$fill in the blank 29
   Increase in owner's equityNet income for the yearNicole Gorman, capital, November 1, 20Y2Nicole Gorman, capital, October 31, 20Y3Withdrawals	fill in the blank 31
   Increase in owner's equityNet income for the yearNicole Gorman, capital, November 1, 20Y2Nicole Gorman, capital, October 31, 20Y3Withdrawals		fill in the blank 33
   Increase in owner's equityNet income for the yearNicole Gorman, capital, November 1, 20Y2Nicole Gorman, capital, October 31, 20Y3Withdrawals		$fill in the blank 35

   Prepare a balance sheet.

   Gorman Group Balance Sheet October 31, 20Y3
   Assets				Liabilities
   Current assets:				Current liabilities:
   Accounts payableCashNicole Gorman, capitalSalaries payableUnearned rent		$fill in the blank 37		Accounts payableAccounts receivableBuildingsNicole Gorman, capitalPrepaid insurance	$fill in the blank 39
   Accounts payableAccounts receivableNicole Gorman, capitalSalaries payableUnearned rent		fill in the blank 41		Accounts receivableSalaries expenseSalaries payableRent revenueRepairs expense	fill in the blank 43
   Nicole Gorman, capitalSalaries payableSuppliesSupplies expenseUtilities expense		fill in the blank 45		Accounts receivableAccumulated depreciationPrepaid rentRent revenueUnearned rent	fill in the blank 47
   Accumulated depreciationInsurance expenseEquipmentPrepaid insuranceUnearned rent		fill in the blank 49		Total liabilities		$fill in the blank 50
   Total current assets			$fill in the blank 51
   Property, plant, and equipment:				Owner's Equity
   Accounts receivableCashService feesLandSupplies		$fill in the blank 53		CashNicole Gorman, capitalNicole Gorman, drawingService feesSupplies		fill in the blank 55
   Accounts payableAccumulated depreciation-buildingsBuildingsDepreciation expense-buildingsNicole Gorman, capital	$fill in the blank 57
   Less accounts payableLess accumulated depreciation-buildingsLess cashLess depreciation expense-buildingsLess Nicole Gorman, capital	fill in the blank 59	fill in the blank 60
   Accounts payableEquipmentDepreciation expense-equipmentNicole Gorman, capitalUnearned rent	$fill in the blank 62
   Less accounts payableLess accumulated depreciation-equipmentLess cashLess depreciation expense-equipmentLess prepaid insurance	fill in the blank 64	fill in the blank 65
   Total property, plant, and equipment			fill in the blank 66
   Total assets			$fill in the blank 67	Total liabilities and owner's equity		$fill in the blank 68

   2. Journalize the entries that were required to close the accounts at October 31. If an amount box does not require an entry, leave it blank.

   Date	Account	Debit	Credit
   Oct. 31	Nicole Gorman, DrawingNicole Gorman, CapitalMiscellaneous ExpenseService FeesUtilities Expense	fill in the blank 70	fill in the blank 71
   	CashInsurance ExpenseNicole Gorman, CapitalPrepaid InsuranceRent Revenue	fill in the blank 73	fill in the blank 74
   	Accounts ReceivableNicole Gorman, DrawingNicole Gorman, CapitalSalaries ExpenseUnearned Rent	fill in the blank 76	fill in the blank 77
   	Accounts ReceivableDepreciation ExpenseEquipmentNicole Gorman, DrawingNicole Gorman, CapitalSalaries Payable	fill in the blank 79	fill in the blank 80
   	Accumulated Depreciation-EquipmentEquipmentNicole Gorman, CapitalNicole Gorman, DrawingRent Expense	fill in the blank 82	fill in the blank 83
   	EquipmentRent RevenueNicole Gorman, CapitalNicole Gorman, DrawingSupplies Expense	fill in the blank 85	fill in the blank 86
   	EquipmentNicole Gorman, DrawingService FeesSuppliesUtilities Expense	fill in the blank 88	fill in the blank 89
   	BuildingsDepreciation ExpenseBuildingsNicole Gorman, CapitalNicole Gorman, DrawingRent Revenue	fill in the blank 91	fill in the blank 92
   	Accumulated Depreciation-EquipmentBuildingsEquipmentNicole Gorman, CapitalRepairs Expense	fill in the blank 94	fill in the blank 95
   	Accounts PayableInsurance ExpenseLandPrepaid InsuranceNicole Gorman, Capital	fill in the blank 97	fill in the blank 98
   	Accounts ReceivableEquipmentMiscellaneous ExpenseNicole Gorman, CapitalPrepaid Insurance	fill in the blank 100	fill in the blank 101
   	CashEquipmentMiscellaneous ExpenseNicole Gorman, CapitalNicole Gorman, Drawing	fill in the blank 103	fill in the blank 104
   Oct. 31	Accounts PayableEquipmentNicole Gorman, CapitalNicole Gorman, DrawingRent Revenue	fill in the blank 106	fill in the blank 107
   	CashEquipmentNicole Gorman, CapitalNicole Gorman, DrawingSupplies Expense	fill in the blank 109	fill in the blank 110

   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? $fill in the blank 111

   Net IncomeNet Loss