At the end of the year, the adjusted trial balance for Devonshire Corporation contains the following amounts for the income statement accounts. (The balance in each account is the normal balance for that type of account.)

Required
1. Prepare all necessary journal entries to close Devonshire Corporation's accounts at the end of the year.
2. Assume that the accountant for Devonshire forgets to record the closing entries. What will be the effect on net income for the following year? Explain your answer.

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Account Advertising Fees Revenue Interest Revenue Wage and Salary Expense Utilities Expense Insurance Expense Depreciation Expense Interest Expense Income Tax Expense Dividends Balance $58,500 2,700 14,300 12,500 7,300 16,250 2,600 3,300 2,000