Purpose of closing the books

Reference no: EM13259283

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?

Reference no: EM13259283

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