Financial Statements and Closing Entries The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. As of October 31, 2019, 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, 2019 Adjusted Trial Balance Account Title Dr. Cr. Cash 14,020 Accounts Receivable 30,530 Supplies 4,770 Prepaid Insurance 10,300 Land 108,000 Buildings 390,000 Accumulated Depreciation-Buildings 127,100 Equipment 282,000 Accumulated Depreciation-Equipment 165,500 Accounts Payable 36,110 Salaries Payable 3,580 Unearned Rent 1,620 Nicole Gorman, Capital 462,850 Nicole Gorman, Drawing 27,100 Service Fees 514,920 Rent Revenue 5,440 Salaries Expense 369,150 Depreciation Expense—Equipment 20,000 Rent Expense 16,800 Supplies Expense 11,880 Utilities Expense 10,730 Depreciation Expense—Buildings 7,160 Repairs Expense 5,910 Insurance Expense 3,240 Miscellaneous Expense 5,530 1,317,120 1,317,120 Required: 1. Prepare an income statement. Gorman Group Income Statement For the Year Ended October 31, 2019 Revenues: Total revenues Expenses: Total expenses Net income 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, 2019 Prepare a balance sheet. Gorman Group Balance Sheet October 31, 2019 Assets Liabilities Current assets: Current liabilities: Total liabilities Total current assets Property, plant, and equipment: Owner's Equity Total property, plant, and equipment Total assets Total liabilities and owner's equity 2. Journalize the entries that were required to close the accounts at October 31. For a compound transaction, if an amount box does not require an entry, leave it blank. Date Account Debit Credit Oct. 31 Oct. 31 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 109
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Financial Statements and Closing Entries
The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. As of October 31, 2019, 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, 2019 |
||
| Adjusted |
||
| Account Title | Dr. | Cr. |
| Cash | 14,020 | |
| 30,530 | ||
| Supplies | 4,770 | |
| Prepaid Insurance | 10,300 | |
| Land | 108,000 | |
| Buildings | 390,000 | |
| 127,100 | ||
| Equipment | 282,000 | |
| Accumulated Depreciation-Equipment | 165,500 | |
| Accounts Payable | 36,110 | |
| Salaries Payable | 3,580 | |
| Unearned Rent | 1,620 | |
| Nicole Gorman, Capital | 462,850 | |
| Nicole Gorman, Drawing | 27,100 | |
| Service Fees | 514,920 | |
| Rent Revenue | 5,440 | |
| Salaries Expense | 369,150 | |
| Depreciation Expense—Equipment | 20,000 | |
| Rent Expense | 16,800 | |
| Supplies Expense | 11,880 | |
| Utilities Expense | 10,730 | |
| Depreciation Expense—Buildings | 7,160 | |
| Repairs Expense | 5,910 | |
| Insurance Expense | 3,240 | |
| Miscellaneous Expense | 5,530 | |
| 1,317,120 | 1,317,120 |
Required:
1. Prepare an income statement.
| Gorman Group Income Statement For the Year Ended October 31, 2019 |
||
|---|---|---|
| Revenues: | ||
| Total revenues | ||
| Expenses: | ||
| Total expenses | ||
| Net income |
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, 2019 |
||
|---|---|---|
Prepare a
| Gorman Group Balance Sheet October 31, 2019 |
||||||
|---|---|---|---|---|---|---|
| Assets | Liabilities | |||||
| Current assets: | Current liabilities: | |||||
| Total liabilities | ||||||
| Total current assets | ||||||
| Property, plant, and equipment: | Owner's Equity | |||||
| Total property, plant, and equipment | ||||||
| Total assets | Total liabilities and owner's equity |
2.
| Date | Account | Debit | Credit |
|---|---|---|---|
| Oct. 31 | |||
| Oct. 31 | |||
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 109
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