On December 31, 2004, Berts Farm Store had the following account balances in its accounting system. All

On December 31, 2004, 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.

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 balancesheet?

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Bert's Farm Store Account Balances Before Closing December 31, 2004 BalanceSales Account Account Balance Cash Merchandise Supplies Prepaid Insurance Equipment Accumulated Depreciation interest Payable Notes Payable Owners' Equity $ 700 2,800 925 450 3,550 Cost of Goods Sold Wages Expense Utilities Expense Depreciation Expense Insurance Expense Supplies Expense Interest Expense $2,200 900 400 150 50 100 150 100 150 2,000 4,175