4. At the end of 1998, the adjusted trial balance for Donkey Corporation contains the following selected accounts and balances. All the accounts have normal balances.

Insurance Revenue $ 3,600 Wages and Salary Expense $15,600

Insurance Expense 6,500 Interest Expense 2,400

Depreciation Expense 12,000 Advertising Fees Earned 54,300

Utilities Expense 12,400 Income Tax Expense 5,800

Accounts Receivable 12,300

1. Prepare the necessary closing journal entries at the end of the year. (8 points)

1. Describe the 2 purposes of closing entries. (2 points)

1. If the accountant forgets to record the closing entries for 1998, what is the effect on net income for the following year, 1999. Explain your answer. (4 points)