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: The Gorman Group End-of-Period Spreadsheet For the Year Ended October 31, 20Y9 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, 20Y9 Revenues: $ Total revenues $ Expenses: $ Total expenses $ 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. The Gorman Group Statement of Stockholders’ Equity For the Year Ended October 31, 20Y9 Common Stock Retained Earnings Total $ $ $ $ $ $ Prepare a balance sheet. The Gorman Group Balance Sheet October 31, 20Y9 Assets Liabilities Current assets: Current liabilities: $ $ Total liabilities $ Total current assets $ Property, plant, and equipment: Stockholders' Equity $ $ $ $ Total property, plant, and equipment Total stockholders' equity Total assets $ Total liabilities and stockholders' equity $ 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 20Y9 Oct. 31 3. If the balance of Retained Earnings had instead increased $115,000 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 the amount as positive number. $
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.
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:
| The Gorman Group End-of-Period Spreadsheet For the Year Ended October 31, 20Y9 |
||
| Adjusted |
||
| Account Title | Dr. | Cr. |
| Cash | 11,000 | |
| 28,150 | ||
| Supplies | 6,350 | |
| Prepaid Insurance | 9,500 | |
| Land | 75,000 | |
| Buildings | 250,000 | |
| Accumulated |
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 | |
| 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, 20Y9 |
||
|---|---|---|
| Revenues: | ||
| $ | ||
| Total revenues | $ | |
| Expenses: | ||
| $ | ||
| Total expenses | ||
| $ |
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.
| The Gorman Group Statement of Stockholders’ Equity For the Year Ended October 31, 20Y9 |
|||
|---|---|---|---|
| Common Stock | Retained Earnings | Total | |
| $ | $ | $ | |
| $ | $ | $ |
Prepare a balance sheet.
| The Gorman Group Balance Sheet October 31, 20Y9 |
||||||
|---|---|---|---|---|---|---|
| Assets | Liabilities | |||||
| Current assets: | Current liabilities: | |||||
| $ | $ | |||||
| Total liabilities | $ | |||||
| Total current assets | $ | |||||
| Property, plant, and equipment: | ||||||
| $ | $ | |||||
| $ | ||||||
| $ | ||||||
| Total property, plant, and equipment | Total stockholders' equity | |||||
| Total assets | $ | Total liabilities and stockholders' equity | $ |
2.
| Date | Account | Debit | Credit |
|---|---|---|---|
| 20Y9 Oct. 31 | |||
| 20Y9 Oct. 31 | |||
3. If the balance of Retained Earnings had instead increased $115,000 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 the amount as positive number.
$
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