On December 31, 2007, Bert's Farm Store had the following account balances in its accounting system. All year-end adjustments had been entered, but the books had not yet been closed.
Bert's Farm Store
Account Balances before Closing
December 31, 2007
Account Balance Account Balance
Cash $700 Sales Revenue $2,200
Merchandise 2,800 Costof 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 owners' equity that will be reported on the balance sheet?