|Purpose:||(L.O. 4) This exercise will review closing entries for a merchandising enterprise.|
Closing entries are recorded at the end of an accounting period to prepare the temporary accounts for the subsequent accounting period. For example, assume the calendar year is the accounting period for a company. At the end of 2014, the Sales account balance is closed so that the Sales account begins the year of 2015 with a zero balance. Therefore, at the end of 2015, the balance in the Sales account will reflect sales that took place in that single year (2015).
Closing entries also update the balance of the Retained Earnings account.
Refer to the facts in Exercise 5-5 and its Solution. Prepare the closing entries for Steve Bradley Golf Products, Inc. for the year ending December 31, 2014.