On December 31, 2007, Bert's Farm Store had the followingaccount balances in its accounting system. All year-endadjustments had been entered, but the books had not yet beenclosed.
|
Accounts
|
|
Balances
|
|
Account
|
|
Balances
|
|
Cash
|
|
|
700
|
|
Sales Revenue
|
2,200
|
|
Merchandise
|
|
2,800
|
|
Cost of Goods Sold
|
900
|
|
Supplies
|
|
|
925
|
|
Wages Expense
|
400
|
|
Prepaid Insurance
|
|
450
|
|
Utilities Expense
|
150
|
|
Equipment
|
|
3,550
|
|
Depreciation Expense.
|
50
|
|
Accumulated Depreciation
|
1,750
|
|
Insurance Expense.
|
100
|
|
Interest Payable
|
|
150
|
|
Supplies Expense
|
150
|
|
Notes Payable
|
|
2,000
|
|
Interest Expense
|
100
|
|
Owners Equity
|
|
4,175
|
|
|
|
|
A. What is the purpose of closing the books?
B. Prepare all necessary closing entries.
C. After closing, what is the amount of owner'sequity that will be reported on the balance sheet?