The income statement for Roberts Enterprises for the year ended June 30, 2009, is provided.
Roberts Enterprises
Income Statement
For the Year Ended June 30, 2009
Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 263,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... (148,000)
Selling and general expenses .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,300)
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 93,700
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... (33,000)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,700
1. Prepare a journal entry to close the accounts to Retained Earnings.
2. What problem may arise in closing the accounts if the information from the income statement is used?