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Financial Statements and Closing Entries

The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. As of October 31, 20Y9, the end of the fiscal year, the accountant for The Gorman Group prepared an end-of-period spreadsheet, part of which follows:

Account Title	Adjusted Trial Balance Dr.	Adjusted Trial Balance Cr.
Cash	18,490
Accounts Receivable	40,260
Supplies	6,290
Prepaid Insurance	13,590
Land	143,000
Buildings	515,000
Accumulated Depreciation-Buildings		167,600
Equipment	372,000
Accumulated Depreciation-Equipment		218,300
Accounts Payable		47,620
Salaries Payable		4,720
Unearned Rent		2,140
Common Stock		214,000
Retained Earnings		397,680
Dividends	35,700
Service Fees		679,010
Rent Revenue		7,170
Salaries Expense	486,780
Depreciation Expense-Equipment	26,400
Rent Expense	22,100
Supplies Expense	15,660
Utilities Expense	14,150
Depreciation Expense-Buildings	9,440
Repairs Expense	7,800
Insurance Expense	4,280
Miscellaneous Expense	7,300
Total	1,738,240	1,738,240

Required:

1. Prepare an income statement.

Line Item Description	Amount	Amount
Revenues:
Common stockInsurance expenseMiscellaneous expenseService feesSupplies expense	$fill in the blank 2
Rent expenseRent revenueRepairs expenseUnearned rentUtilities expense	fill in the blank 4
Total revenues		$fill in the blank 5
Expenses:
BuildingsCashRent revenueSalaries expenseSalaries payable	$fill in the blank 7
Accumulated depreciation-equipmentCommon stockDepreciation expense-equipmentEquipmentLand	fill in the blank 9
Accounts payableRent expenseRent revenueService feesUnearned rent	fill in the blank 11
Accounts receivableCommon stockRent revenueSuppliesSupplies expense	fill in the blank 13
Common stockRent revenueService feesUnearned rentUtilities expense	fill in the blank 15
Accumulated depreciation-buildingsBuildingsDepreciation expense-buildingsEquipmentLand	fill in the blank 17
Accounts payableCommon stockRent 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 incomeNet loss		$fill in the blank 26

Prepare a statement of stockholders equity. During the year, no additional Common stock was issued. If an amount box does not require an entry, leave it blank. If a Net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign.

Line Item Description	Common Stock	Retained Earnings	Total
Balances, November 1, 20Y8Balances, October 31, 20Y9DividendsNet incomeNet loss	$fill in the blank 28	$fill in the blank 29	$fill in the blank 30
Balances, November 1, 20Y8Balances, October 31, 20Y9Change in retained earningsNet incomeNet loss	fill in the blank 32	fill in the blank 33	fill in the blank 34
Balances, November 1, 20Y8Balances, October 31, 20Y9DividendsNet incomeNet loss	fill in the blank 36	fill in the blank 37	fill in the blank 38
Balances, November 1, 20Y8Balances, October 31, 20Y9DividendsNet incomeNet loss	$fill in the blank 40	$fill in the blank 41	$fill in the blank 42

Prepare a balance sheet.

Assets
Current assets:
Accounts payableCashCommon stockSalaries payableUnearned rent		$fill in the blank 44
Accounts payableAccounts receivableCommon stockSalaries payableUnearned rent		fill in the blank 46
Common stockSalaries payableSuppliesSupplies expenseUtilities expense		fill in the blank 48
Accumulated depreciation-buildingsEquipmentInsurance expensePrepaid insuranceUnearned rent		fill in the blank 50
Total current assets			$fill in the blank 51
Property, plant, and equipment:
Accounts receivableCashLandService feesSupplies		$fill in the blank 53
Accounts payableAccumulated depreciation-buildingsBuildingsCommon stockDepreciation expense-buildings	$fill in the blank 55
Accounts payableAccumulated depreciation-buildingsCashCommon stockDepreciation expense	fill in the blank 57
Accounts payableBook value-buildingsCashCommon stockDepreciation expense		fill in the blank 59
Accounts payableCommon stockDepreciation expense-equipmentEquipmentUnearned rent	$fill in the blank 61
Accounts payableAccumulated depreciation-equipmentCashDepreciation expensePrepaid insurance	fill in the blank 63
Accounts payableBook value-equipmentCashDepreciation expensePrepaid insurance		fill in the blank 65
Total property, plant, and equipment			fill in the blank 66
Total assets			$fill in the blank 67
Liabilities
Current liabilities:
Accounts payableAccounts receivableBuildingsCommon stockPrepaid insurance		$fill in the blank 69
Accounts receivableRent revenueRepairs expenseSalaries expenseSalaries payable		fill in the blank 71
Accounts receivableAccumulated depreciation-buildingsPrepaid rentRent revenueUnearned rent		fill in the blank 73
Total liabilities			$fill in the blank 74
Stockholders' Equity
CashCommon stockLandService feesSupplies		$fill in the blank 76
CashLandRetained earningsService feesSupplies		fill in the blank 78
Total stockholders' equity			fill in the blank 79
Total liabilities and stockholders' equity			$fill in the blank 80

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
20Y9 Oct. 31	Insurance expenseMiscellaneous expenseRetained earningsService feesUtilities expense	fill in the blank 82	fill in the blank 83
	CashInsurance expensePrepaid insuranceRent revenueRepairs expense	fill in the blank 85	fill in the blank 86
	Accounts receivableCashDividendsSalaries expenseSalaries payable	fill in the blank 88	fill in the blank 89
	Accumulated depreciation-equipmentDepreciation expense-equipmentEquipmentLandService fees	fill in the blank 91	fill in the blank 92
	Accounts receivableRent expenseRent revenueRetained earningsUnearned rent	fill in the blank 94	fill in the blank 95
	CashDividendsService feesSuppliesSupplies expense	fill in the blank 97	fill in the blank 98
	BuildingsDividendsRent revenueRetained earningsUtilities expense	fill in the blank 100	fill in the blank 101
	Accounts receivableAccumulated depreciation-equipmentBuildingsDepreciation expense-buildingsLand	fill in the blank 103	fill in the blank 104
	Accounts payableEquipmentLandPrepaid insuranceRepairs expense	fill in the blank 106	fill in the blank 107
	Accounts receivableCashInsurance expensePrepaid insuranceRetained earnings	fill in the blank 109	fill in the blank 110
	Accounts receivableCashEquipmentMiscellaneous expenseSalaries payable	fill in the blank 112	fill in the blank 113
	CashRetained earningsService feesUnearned rentWages Payable	fill in the blank 115	fill in the blank 116
20Y9 Oct. 31	Accounts payableDividendsRent revenueRetained earningsService fees	fill in the blank 118	fill in the blank 119
	Accounts receivableCashDividendsRetained earningsSupplies expense	fill in the blank 121	fill in the blank 122

3. If the balance of Retained earnings had instead increased $50,000 after the closing entries were posted, and the dividends remained the same, what would have been the amount of Net income or Net loss? Enter all amounts as positive numbers. fill in the blank 1 of 2$ fill in the blank 2 of 2

Net IncomeNet Loss