Financial Statements and Closing Entries

The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. As of October 31, 2018, 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, 2018
	Adjusted Trial Balance
Account Title	Dr.	Cr.
Cash	$12,020
Accounts Receivable	26,180
Supplies	4,090
Prepaid Insurance	8,830
Land	93,000
Buildings	335,000
Accumulated Depreciation-Buildings		109,000
Equipment	242,000
Accumulated Depreciation-Equipment		141,900
Accounts Payable		30,960
Salaries Payable		3,070
Unearned Rent		1,390
Common Stock		139,000
Retained Earnings		259,060
Dividends	23,200
Service Fees		441,520
Rent Revenue		4,660
Salaries Expense	316,530
Depreciation Expense-Equipment	17,200
Rent Expense	14,400
Supplies Expense	10,180
Utilities Expense	9,200
Depreciation Expense-Buildings	6,140
Repairs Expense	5,070
Insurance Expense	2,780
Miscellaneous Expense	4,740
	1,130,560	1,130,560

Required:

1. Prepare an income statement.

The Gorman Group Income Statement For the Year Ended October 31, 2018
Revenues:
Accounts receivableCashMiscellaneous expenseService feesSupplies expense	fill in the blank 2
DividendsRent expenseRent revenueRepairs expenseUnearned rent	fill in the blank 4
Total Revenues		fill in the blank 5
Expenses:
BuildingCashRent revenueSalaries expenseSalaries payable	fill in the blank 7
Accumulated depreciationCommon stockDepreciation expense-equipmentEquipmentLand	fill in the blank 9
Accounts payableRent expenseRent revenueRetained earningsUnearned rent	fill in the blank 11
Accounts receivableCashRent revenueSuppliesSupplies expense	fill in the blank 13
Common stockRent revenueService feesUnearned rentUtilities expense	fill in the blank 15
Accumulated depreciationBuildingsDepreciation expense-buildingsEquipmentLand	fill in the blank 17
Accounts payableDividendsRent revenueRepairs expenseSalaries payable	fill in the blank 19
Accounts receivableCashInsurance expensePrepaid insuranceRent revenue	fill in the blank 21
Accumulated depreciation-buildingBuildingsMiscellaneous expenseService feesUnearned rent	fill in the blank 23
Total Expenses		fill in the blank 24
Net income		fill in the blank 25

Prepare a Retained Earnings Statement.

The Gorman Group Retained Earnings Statement For the Year Ended October 31, 2018
Common stockDividendsNet incomeRetained earnings, November 1, 2017Retained earnings, October 31, 2018		fill in the blank 27
Common stockCashNet incomeRetained earnings, November 1, 2017Retained earnings, October 31, 2018	fill in the blank 29
Common stockCashDividendsRetained earnings, November 1, 2017Retained earnings, October 31, 2018	fill in the blank 31
Change in retained earningsDividendsRetained earnings, November 1, 2017Retained earnings, October 31, 2018		fill in the blank 33
CashDividendsNet incomeRetained earnings, November 1, 2017Retained earnings, October 31, 2018		fill in the blank 35

Prepare a balance sheet.

The Gorman Group Balance Sheet October 31, 2018
Assets				Liabilities
Current assets:				Current liabilities:
Accounts payableCommon stockCashSalaries payableUnearned rent		fill in the blank 37		Accounts payableAccounts receivableBuildingCommon stockPrepaid insurance	fill in the blank 39
Accounts payableAccounts receivableCommon stockSalaries payableUnearned rent		fill in the blank 41		Accounts receivableRent revenueRepairs expenseSalaries expenseSalaries payable	fill in the blank 43
Common stockSalaries payableSuppliesSupplies expenseUtilities expense		fill in the blank 45		Accounts receivableAccumulated depreciation-buildingsPrepaid rentRent revenueUnearned rent	fill in the blank 47
Accumulated depreciation-buildingsEquipmentInsurance expensePrepaid 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:				Stockholders' Equity
Accounts receivableCashLandService feesSupplies		fill in the blank 53		Common stockCashLandService feesSupplies	fill in the blank 55
Accounts payableAccumulated depreciation-buildingsBuildingsCommon stockDepreciation expense-buildings	fill in the blank 57			CashLandRetained earningsService feesSupplies	fill in the blank 59
Accounts payableAccumulated depreciation-buildingsCommon stockCashDepreciation expense	fill in the blank 61
Accounts payableBook value-buildingsCommon stockCashDepreciation expense		fill in the blank 63
Accounts payableCommon stockDepreciation expense-equipmentEquipmentUnearned rent	fill in the blank 65
Accounts payableAccumulated depreciation-equipmentCashDepreciation expensePrepaid insurance	fill in the blank 67
Accounts payableBook value-equipmentCashDepreciation expensePrepaid insurance		fill in the blank 69
Total property, plant, and equipment			fill in the blank 70	Total stockholders' equity		fill in the blank 71
Total assets			fill in the blank 72	Total liabilities and stockholders' equity		fill in the blank 73

2. Journalize the entries that were required to close the accounts at October 31. For a compound transaction, if a box does not require an entry, leave it blank.

Date	Account	Debit	Credit
2018
Oct. 31 Close revenues	Income SummaryMiscellaneous ExpenseRetained EarningsService FeesUtilities Expense	fill in the blank 75	fill in the blank 76
	CashIncome SummaryInsurance ExpensePrepaid InsuranceRent Revenue	fill in the blank 78	fill in the blank 79
	DividendsIncome SummaryRepairs ExpenseRetained EarningsService Fees	fill in the blank 81	fill in the blank 82
Oct. 31 Close expenses	Advertising ExpenseIncome SummaryRent ExpenseRetained EarningsUnearned Rent	fill in the blank 84	fill in the blank 85
	Accounts ReceivableIncome SummaryRetained EarningsSalaries ExpenseSalaries Payable	fill in the blank 87	fill in the blank 88
	Accumulated Depreciation-EquipmentDepreciation Expense-EquipmentEquipmentIncome SummaryLand	fill in the blank 90	fill in the blank 91
	CashIncome SummaryRent ExpenseRent RevenueUnearned Rent	fill in the blank 93	fill in the blank 94
	Income SummaryRetained EarningsService FeesSuppliesSupplies Expense	fill in the blank 96	fill in the blank 97
	Accounts PayableBuildingIncome SummaryRent RevenueUtilities Expense	fill in the blank 99	fill in the blank 100
	Accumulated Depreciation-EquipmentBuildingsDepreciation Expense-BuildingsIncome SummaryLand	fill in the blank 102	fill in the blank 103
	Accounts PayableIncome SummaryLandPrepaid InsuranceRepairs Expense	fill in the blank 105	fill in the blank 106
	Accounts ReceivableCommon StockIncome SummaryInsurance ExpensePrepaid Insurance	fill in the blank 108	fill in the blank 109
	CashEquipmentIncome SummaryMiscellaneous ExpenseSalaries Payable	fill in the blank 111	fill in the blank 112
Oct. 31 Close income/loss	Accounts PayableCashCommon StockDividendsIncome Summary	fill in the blank 114
	Income SummaryRetained EarningsService FeesUnearned RentWages Payable		fill in the blank 116
Oct. 31 Close dividends	Accounts PayableCashDividendsRent RevenueRetained Earnings	fill in the blank 118
	CashDividendsIncome SummaryService feesSupplies Expense		fill in the blank 120

3. If Retained Earnings had instead decreased $32,500 after the closing entries were posted, and the dividends remained the same, what would have been the amount of net income or net loss? Enter all amounts as positive numbers. $fill in the blank 121

Net IncomeNet Loss