90.2K

Verified Solution

Link Copied!

Financial Statements and Closing Entries

The Gorman Group is a financial planning services firm owned andoperated by Nicole Gorman. As of October 31, 2018, the end of thefiscal year, the accountant for The Gorman Group prepared anend-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	$11,000
Accounts Receivable	28,150
Supplies	6,350
Prepaid Insurance	9,500
Land	75,000
Buildings	250,000
Accumulated Depreciation-Buildings		117,200
Equipment	240,000
Accumulated Depreciation-Equipment		151,700
Accounts Payable		33,300
Salaries Payable		3,300
Unearned Rent		1,500
Common Stock		25,000
Retained Earnings		195,000
Dividends	20,000
Service Fees		468,000
Rent Revenue		5,000
Salaries Expense	291,000
Depreciation Expense-Equipment	17,500
Rent Expense	15,500
Supplies Expense	9,000
Utilities Expense	8,500
Depreciation Expense-Buildings	6,600
Repairs Expense	3,450
Insurance Expense	3,000
Miscellaneous Expense	5,450
	1,000,000	1,000,000

Required:

1. Prepare an income statement.

The Gorman Group Income Statement For the Year Ended October 31, 2018
Revenues:
Total revenues
Expenses:
Total expenses		$
		$

Prepare a retained earnings statement.

The Gorman Group Retained Earnings Statement For the Year Ended October 31, 2018
		$

Prepare a balance sheet.

The Gorman Group Balance Sheet October 31, 2018
Assets				Liabilities
Current assets:				Current liabilities:
				Total liabilities
Total current assets
Property, plant, and equipment:				Stockholders' Equity
Total property, plant, andequipment				Total stockholders' equity
Total assets				Total liabilities and stockholders' equity

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

Date	Account	Debit	Credit
Oct. 31 Close revenues
Oct. 31 Close expenses
Oct. 31 Close income/loss
Oct. 31 Close dividends

3. If the balance of Retained Earnings hadinstead increased $115,000 after the closing entries were posted,and the dividends remained the same, what would have been theamount of net income or net loss? Enter all amounts as positivenumbers.
$