PR 4-2B Financial statements and closing entries Obj. 2, 3 ed The Gorman Group i

Question

PR 4-2B Financial statements and closing entries Obj. 2, 3 ed The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. 1: As of October 31, 2018, the end of the fiscal year, the accountant for The Gorman Group prepared 00 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 6 Account Title 8 Cash 9 Accounts Receivable 10 Supplies 11 Prepaid Insurance 12 Land 13 Buildings 14 Accumulated Depreciation-Buildin 15 Equipment 16 Accumulated Depreciation-Equipment 17 Accounts Payable 18 Salaries Payable 19 Unearned Rent 20 Common Stock 21 Retained Earnings 22 Dividends 23 Service Fees 24 Rent Revenue 25 Salaries Expense 26 Depreciation Expense-Equipment 27 Rent Expense 28 Supplies Expense 29 Utilities Expense 30 Depreciation Expense-Buildings 31 Repairs Expense 32 Insurance Expense 9,500 5,000 250,000 151.700 33,300 3,300 1 25,000 195,000 20,000 468,000 5,000 291,000 17,500 15,500 9,000 8,500 6,600 3,450 3,000 33 Miscellaneous Expense 1,000,000 1,000,000 Instructions 1. Prepare an income statement, a retained earnings statement, and a balance sheet. 2. Journalize the entries that were required to close the accounts at October 31

Explanation / Answer

Nicole Gorman Income Statement For the Year Ended 31 October, 2018 Particulars Amount Amont Service Fee $468,000 Rent Revenue $5,000 Total Income $473,000 Less: Expenses 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 Total Expenses $360,000 Net Income $113,000 Nicole Gorman Statement of Retained Earnings For the Year Ended 31 October, 2018 Particulars Amount Retained Earnings at beginning of the year $195,000 Add: Net Income till October 2018 $113,000 $308,000 Less: Dividends Declared $20,000 Retained Earnings at the end of the year $288,000 Nicole Gorman Statement of Balance Sheet As on 31st October 2018 Assets Current Assets       Cash $11,000       Accounts Receivable $28,150       Supplies $6,350       Prepaid Insurance $9,500 Non Current Assets       Land $75,000       Buildings $250,000       Accumulated Depreciation - Buildings ($117,200)       Equipment $240,000       Accumulated Depreciation - Equipment ($151,700) Total Assets $351,100 Total Liabilities and Stockholders' equity Current Liabilities       Accounts Payable $33,300       Salaries Payable $3,300       Unearned Rent $1,500 Total Liabilities $38,100 Stockholders' Equity       Common Stock $25,000       Retained Earnings $288,000 Total Stockholders' Equity $313,000 Total Liabilities and Stockholders' equity $351,100 Date Account Title and explanation Debit Credit 31-Oct-18 Service Fees $468,000 Rent Revenue $5,000 Income Summary $473,000 (Being revenue account closed) 31-Oct-18 Income Summary $360,000 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 (Being expenses account closed) 31-Oct-18 Income Summary $113,000 Retained Earnings $113,000 (Being Income transferred) 31-Oct-18 Retained Earnings $20,000 Dividends $20,000 (Being Dividend paid)

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