Refer to the information for Sparrow Company on the previous page.

Required:
1. Prepare the closing entries for Sparrow at December 31, 2011.
2. How does the closing process affect retained earnings?

Transcribed Image Text:

Sparrow Company Adjusted Trial Balance December 31, 2011 Debit Credit $ 3,150 5,650 4,480 42,000 Cash Accounts Receivable Prepaid Insurance Equipment Accumulated Depreciation, Equipment Accounts Payable Salaries Payable Unearned Service Revenue Common Stock Retained Earmings Dividends Service Revenue Salaries Expense Rent Expense Insurance Expense Depreciation Expense Income Taxes Expense 24,000 2,800 4,450 3,875 8,000 2,255 10,500 99,600 49,400 17,250 2,200 4,950 5,400 Total $144,980$144,980