[SOLVED] James and Susan Morley recently converted a

James and Susan Morley recently converted a large turn-of-the-century house into a hotel and incorporated the business as Saginaw Enterprises. Their accountant is inexperienced and has made the following closing entries at the end of Saginaw’s first year of operations:

Income Summary ................................................ 210,000
Service Revenue .............................................. 177,000
Accumulated Depreciation .............................. 33,000
Depreciation Expense......................................... 33,000
Income Taxes Expense ........................................ 8,200
Utilities Expense ................................................. 12,700
Wages Expense ................................................... 66,000
Supplies Expense ................................................. 31,000
Accounts Payable ................................................ 4,500
Income Summary............................................ 155,400
Income Summary ................................................ 54,600
Retained Earnings ........................................... 54,600
Dividends ............................................................ 3,200
Income Summary............................................ 3,200

Required:
1. Indicate what is wrong with the closing entries above.
2. Prepare the correct closing entries. Assume that all necessary accounts are presented above and that the amounts given are correct.
3. CONCEPTUAL CONNECTION Explain why closing entries are necessary.

Question: James and Susan Morley recently converted a