GThe Gorman GroupEnd-of-Period SpreadsheetFor the Year Ended October 31, 20193AdjustedTrial Balance46 Account TitleCr.Dr.8 Cash9 Accounts Receivable10 Supplies11 Prepaid Insurance11,00028,1506,3509,50075,000250,00012 Land13 Buildings14 Accumulated Depreciation–Buildings15 Equipment16 Accumulated Depreciation–Equipment17 Accounts Payable18 Salaries Payable117,200240,000151,70033,3003,3001,500220,00019 Unearned Rent20 Nicole Gorman, Capital21 Nicole Gorman, Drawing22 Service Fees23 Rent Revenue24 Salaries Expense25 Depreciation Expense–Equipment26 Rent Expense27 Supplies Expense28 Utilities Expense29 Depreciation Expense–Buildings30 Repairs Expense31 Insurance Expense32 Miscellaneous Expense20,000468,0005,000291,00017,50015,5009,0008,5006,6003,4503,0005,4501,000,000331,000,000(Continued)

Question
Asked Dec 5, 2019
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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:

 

Instructions
1. Prepare an income statement, a statement of owner’s equity (no additional investments were made during the year), and a balance sheet.
2. Journalize the entries that were required to close the accounts at October 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?

G
The Gorman Group
End-of-Period Spreadsheet
For the Year Ended October 31, 2019
3
Adjusted
Trial Balance
4
6 Account Title
Cr.
Dr.
8 Cash
9 Accounts Receivable
10 Supplies
11 Prepaid Insurance
11,000
28,150
6,350
9,500
75,000
250,000
12 Land
13 Buildings
14 Accumulated Depreciation–Buildings
15 Equipment
16 Accumulated Depreciation–Equipment
17 Accounts Payable
18 Salaries Payable
117,200
240,000
151,700
33,300
3,300
1,500
220,000
19 Unearned Rent
20 Nicole Gorman, Capital
21 Nicole Gorman, Drawing
22 Service Fees
23 Rent Revenue
24 Salaries Expense
25 Depreciation Expense–Equipment
26 Rent Expense
27 Supplies Expense
28 Utilities Expense
29 Depreciation Expense–Buildings
30 Repairs Expense
31 Insurance Expense
32 Miscellaneous Expense
20,000
468,000
5,000
291,000
17,500
15,500
9,000
8,500
6,600
3,450
3,000
5,450
1,000,000
33
1,000,000
(Continued)
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G The Gorman Group End-of-Period Spreadsheet For the Year Ended October 31, 2019 3 Adjusted Trial Balance 4 6 Account Title Cr. Dr. 8 Cash 9 Accounts Receivable 10 Supplies 11 Prepaid Insurance 11,000 28,150 6,350 9,500 75,000 250,000 12 Land 13 Buildings 14 Accumulated Depreciation–Buildings 15 Equipment 16 Accumulated Depreciation–Equipment 17 Accounts Payable 18 Salaries Payable 117,200 240,000 151,700 33,300 3,300 1,500 220,000 19 Unearned Rent 20 Nicole Gorman, Capital 21 Nicole Gorman, Drawing 22 Service Fees 23 Rent Revenue 24 Salaries Expense 25 Depreciation Expense–Equipment 26 Rent Expense 27 Supplies Expense 28 Utilities Expense 29 Depreciation Expense–Buildings 30 Repairs Expense 31 Insurance Expense 32 Miscellaneous Expense 20,000 468,000 5,000 291,000 17,500 15,500 9,000 8,500 6,600 3,450 3,000 5,450 1,000,000 33 1,000,000 (Continued)

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Expert Answer

Step 1

The income statement is a financial statement that represents the financial performance of the company. Expenses incurred and Income earned during a particular period is depicted and the value of Net Income or Net Loss for the period is computed.

Statement of Owner’s Equity is a financial statement that represents changes in owner’s equity over a period of time.

A balance sheet is a financial statement that represents the financial position of a company as on a particular date.

Step 2

Income Statement

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Gorman Group Income Statement For the period ended October 31st, 2019 Particulars Amount Amount Service Fee 468000 5000 473000 Rent Revenue Less: Salary Expenses Supplies Expenses Depreciation Expenses- Building Depreciation Expenses- Equipment Rent Expense Utilities Expense Repairs Expense 291000 -9000 -6600 -17500 -15500 -8500 -3450 Insurance Expense -3000 Misc. Expense -5450 360000 Net Income 113000

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Step 3

Statement of Owner&r...

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The Gorman Group Computation of Statement of Owner's Equity Amount Particulars Amount Gorman's Capital Add: Net Income Less: Drawings 220000 113000 -20000 93000 Closing Balance 313000

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