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