What is the purpose of closing the books

Assignment Help Accounting Basics

Reference no: EM13257587

On December 31, 2007, Bert's Farm Store had the followingaccount balances in its accounting system. All year-end adjustmentshad been entered, but the books had not yet been closed.

Bert's FarmStore

Account BalancesBefore Closing

December 31, 2007

Account Balance Account Balance

Cash $700 SalesRevenue $2,200

Merchandise 2,800 Cost of GoodsSold 900

Supplies 925 WagesExpense 400

PrepaidInsurance 450 UtilitiesExpense 150

Equipment 3,550 DepreciationExpense 50

AccumulatedDepreciation 1,750 InsuranceExpense 100

InterestPayable 150 SuppliesExpense 150

NotesPayable 2.000 Interest Expense 100

Owner'sEquity 4,175

a. What is the purpose of closing the books?

b. Prepare all necessary closingentries.

c. After closing, what is the amount of owner's equity that will be reported on the balance sheet?

Reference no: EM13257587

Questions Cloud

Variance amount-variance percentage : What is the variance amount? What is the variance percentage? Is the variance favorable orunfavorable?

What would make for a larger increase in the stock variance : What would make for a larger increase in the stock's variance: an increase of .15 in its beta or an increase of 3% in its residual standard deviation?

Find the distance the sled moves before it stops : A sled of mass m is given a kick on a frozen pond. The kick imparts to it an initial speed of 1.60 m/s. The coefficient of kinetic friction between sled and ice is 0.110. Use energy considerations to find the distance the sled moves before it stop..

Searching library research databases : Identifying scholarly resources, such as peer-reviewed journal articles and searching library research databases (general or subject-specific)

What is the purpose of closing the books : What is the purpose of closing the books? After closing, what is the amount of owner's equity that will be reported on the balance sheet?

Present value of the receivable on biotech books : Compute the present value of the receivable on Biotech's books for January 1, 2006 immediately after receiving the $1million down payment.

Find the characteristic frequencies of the system : Three balls are constrained to move on the circumference of a circle of radius R. find the characteristic frequencies of the system

What was the sticker price of the car : What was the sticker price of the car if the monthly interest rate is 1.5% (periodic rate) and it takes 4 years (48 months) to pay off the car?

Explain how you could use breakeven analysis : Explain how you could use breakeven analysis to determine your bid amount on the proposal. Use the Profit Model to demonstrate your response. Ensure you include a well considered discussion of the revenue and expenses.

User Account

All Pages