he adjusted trial balance for Patch Consultant Company at the end of its fiscal year is shown below.

Patch Consultant Company Adjusted Trial Balance December 31, 2011
Cash	$ 7,275
Accounts Receivable	2,325
Prepaid Insurance	585
Offi ce Supplies	440
Offi ce Equipment	6,300
Accumulated DepreciationOffice Equipment		$ 765
Automobile	6,750
Accumulated DepreciationAutomobile		750
Accounts Payable		1,700
Unearned Consulting Fees		1,500
S. Patch, Capital		14,535
S. Patch, Withdrawals	7,000
Consulting Fees Earned		31,700
Offi ce Salaries Expense	13,500
Advertising Expense	2,525
Rent Expense	2,650
Telephone Expense	1,600
	$50,950	$50,950

Required

1. Prepare the required closing entries.

2. Explain why closing entries are necessary at the end of the accounting period.