Q-3) Sparrow Company is a merchandising company and uses perpetual inventory system, Below is the adjusted trial balance as of December 31, 2020. SPARROW COMPANY ADJUSTED TRIAL BALANCE AS OF DECEMBER 31, 2020 (5) BALANCES ACCOUNTS DEBIT CREDIT CASH 57,000 ACCOUNTS RECEIVABLE 75,000 NOTES RECEIVABLE 99,300 MERCHANDISE INVENTORY 20,000 PREPAID ADVERTISING EXPENSE 4,000 PREPAID INSURANCE EXPENSE 2,500 PREPAID RENT EXPENSE 3,000 BUILDINGS 200,000 ACCUMULATED DEPRECIATION (BUILDINGS) 15,000 VEHICLES 50,000 ACCUMULATED DEPRECIATION (VEHICLES) 10,000 FIXTURES 20,000 ACCUMULATED DEPRECIATION (FIXTURES) 15,000 BANK LOAN 60,000 ACCOUNTS PAYABLE 37,000 NOTES PAYABLE 42,000 ACCRUED EXPENSE 2,000 UNEARNED RENT INCOME 6,000 CAPITAL 270,000 RETAINED EARNINGS 55,000 SALES REVENUE 120,000 SALES RETURNS & ALLOWANCES 14,000 COST OF GOODS SOLD 52,000 SALARIES EXPENSE 25,000 ELECTRICITY EXPENSE 8,800 TELEPHONE EXPENSE 3,400 DEPRECIATION EXPENSE (BUILDINGS) 4,000 DEPRECIATION EXPENSE (VEHICLES) 2,000 DEPRECIATION EXPENSE (FIXTURES) 6,000 INSURANCE EXPENSE 1,000 ADVERTISING EXPENSE 2,000 RENT INCOME INTEREST EXPENSE TOTAL 21,000 4,000 653,000 653,000 Required: a) Make the closing entries of the Sparrow Company. b) Prepare the Income Statement for 2020 and the Balance Sheet as of December 31, 2020. c) What is the purpose of making closing entries? Do you think is it necessary to close all of the accounts? Briefly explain with your own words. d) What do you think about the financial performance and financial position of this company? Briefly explain with your own words.