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(Preparing closing entries using spreadsheets and journal entries, LO 2, 3, 6)

Below is a summarized income statement for St. Bruno Inc. (St. Bruno).

a. Prepare a spreadsheet and make the entry that is necessary to close the temporary accounts.

b. Prepare the journal entry necessary to close the temporary accounts.

c. Explain why closing entries are necessary and when they should be recorded.

d. What would be the effect on net income in 2005 if St. Bruno Inc. forgot to prepare a closing entry?

Transcribed Image Text:

St. Bruno Inc. Income Statement for the Year Ended December 31, 2004 Revenue Expenses Net income $10,250,000 6,450,000 $ 3,800,000