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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, 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	15,140
Accounts Receivable	32,960
Supplies	5,150
Prepaid Insurance	11,120
Land	117,000
Buildings	421,000
Accumulated Depreciation-Buildings		137,200
Equipment	304,000
Accumulated Depreciation-Equipment		178,700
Accounts Payable		38,990
Salaries Payable		3,860
Unearned Rent		1,750
Nicole Gorman, Capital		499,620
Nicole Gorman, Drawing	29,300
Service Fees		555,940
Rent Revenue		5,870
Salaries Expense	398,560
Depreciation ExpenseEquipment	21,600
Rent Expense	18,100
Supplies Expense	12,820
Utilities Expense	11,590
Depreciation ExpenseBuildings	7,730
Repairs Expense	6,390
Insurance Expense	3,500
Miscellaneous Expense	5,970
	1,421,930	1,421,930

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