Question

The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. As of October 31, 2018, 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, 2018
	Adjusted Trial Balance
Account Title	Dr.	Cr.
Cash	$13,580
Accounts Receivable	29,570
Supplies	4,620
Prepaid Insurance	9,980
Land	105,000
Buildings	378,000
Accumulated Depreciation-Buildings		123,100
Equipment	273,000
Accumulated Depreciation-Equipment		160,300
Accounts Payable		34,970
Salaries Payable		3,470
Unearned Rent		1,570
Common Stock		157,000
Retained Earnings		291,840
Dividends	26,200
Service Fees		498,730
Rent Revenue		5,270
Salaries Expense	357,540
Depreciation Expense-Equipment	19,400
Rent Expense	16,300
Supplies Expense	11,500
Utilities Expense	10,400
Depreciation Expense-Buildings	6,930
Repairs Expense	5,730
Insurance Expense	3,140
Miscellaneous Expense	5,360
	1,276,250	1,276,250

Required:

1. Prepare an income statement.

The Gorman Group Income Statement For the Year Ended October 31, 2018
Revenues:
Total Revenues
Expenses:
Total Expenses
Net income

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, 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. For a compound transaction, if a box does not require an entry, leave it blank.

Date	Account	Debit	Credit
2018
Oct. 31 Close revenues
Oct. 31 Close expenses
Oct. 31 Close income/loss
Oct. 31 Close dividends

3. If Retained Earnings had instead decreased $36,700 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 all amounts as positive numbers.
$  

Answer 1

Preparation of Income Statement : The Gorman Group Income Statement For the Year Ended October 31, 2018 Particulars $ Service Fees Rent Revenue Total Revenue Amount (S) $ 498,730 $ 5,270 $ 504,000 Less: Operating Expenses Salary Expense Depreciation Expense - Equipment Rent Expense Supplies Expense Utilities Expense Depreciation Expense - Buildings Repairs Expense Insurance Expense Miscellaneous Expenses Total Operating Expenses Net Income 357,540 19,400 16,300 11,500 10,400 6,930 5,730 3,140 5,360 $ 436,300 $ 67,700 Preparation of the Statement of the Retained Earnings : The Gorman Group Statement of Retained Earnings For the Year Ended October 31, 2018 Particulars Amount ($) Opening Balance $ 291,840 Add: Net Income 67,700 359,540 Less : Dividends (26,200) Ending Balance 333,340

Preparation of Balance Sheet: $ Amount ($) Particulars Current Assets : Cash Accounts Receivables Supplies Prepaid Insurance Total Current Assets - ini ninn The Gorman Group Balance Sheet October 31, 2018 $ Amount ($) Particulars Liabilities : 13,580 Current Liabilities: 29,570 Accounts Payable 4,620 Salaries Payable 9,980 Unearned Rent $ 57,750 Total Current Liabilities $ 34,970 $ 3,470 $ 1,570 $ 40,010 $ 40,010 Property, plant and Equiment: Land Buildings Accumulated Depreciation - Buildings $ Total Liabilities $ 105,000 378,000 Stockholders' Equity : (123,100) $ 254,900 Common Stock Retained Earnings 273,000 Total Stockholders' Equity (160,300) $ 112,700 $530,350 Total Liabilties and Stockholders' Equity $ 157,000 $ 333,340 $ 490,340 Equipment Accumulated Depreciation - Equipment Total Assets $ $ $530,350

Credit Journal Entries to Close Accounts: Particulars Service Fees Rent Revenue Income Statement Debit 498,730 5,270 $ $ 504,000 $ 436,300 Income Statement Salary Expense Depreciation Expense - Equipment Rent Expense Supplies Expense Utilities Expense Depreciation Expense - Buildings Repairs Expense Insurance Expense Miscellaneous Expenses $ 357,540 $ 19,400 $ 16,300 $ 11,500 $ 10,400 6,930 5,730 3,140 5,360 $ 67,700 Income Statement Retained Earnings $ 67,700 26,200 Retained Earnings Dividends $ 26,200