Refer to the information for Sparrow Company on the previous page.
Information from previous page.
Sparrow Company had the following adjusted trial balance at December 31, 2019.
Sparrow Company
Adjusted Trial Balance
December 31, 2019

Required:
1. Prepare the closing entries for Sparrow at December 31, 2019.
2. How does the closing process affect retained earnings?

Transcribed Image Text:

Debit Credit Cash Accounts Receivable Prepaid Insurance Equipment Accumulated Depreciation (Equipment) Accounts Payable Salaries Payable Unearned Service Revenue $ 3,150 5,650 4,480 42,000 $ 24,000 2,800 4,450 3,875 Common Stock 8,000 2,255 Retained Earnings Dividends 10,500 99,600 Service Revenue Salaries Expense Rent Expense Insurance Expense Depreciation Expense Income Taxes Expense 49,400 17,250 2,200 4,950 5,400 $144,980 Totals $144,980