The adjusted trial balance for Thao Company, owned by D. Thao, is as follows.

Instructions

a. Prepare closing entries.

b. Use T accounts to post the closing entries and calculate the balance in each account. Income Summary is account No. 350. (Ignore the accounts not aff ected by the closing entries.)

c. Prepare a post-closing trial balance.

D. Thao does not understand why the Owner?s Drawings account is not closed with the expense accounts and why a separate entry is required to close this account. Explain to D. Thao why this is necessary.

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THAO COMPANY Adjusted Trial Balance December 31, 2021 Account Account Titles No. Dr. Cr. $ 5,300 Cash 101 Accounts receivable 112 10,800 Supplies Prepaid insurance Equipment Accumulated depreciation-equipment Notes payable Accounts payable Salaries payable Interest payable D. Thao, capital D. Thao, drawings Service revenue 1,500 126 130 2,000 27,000 157 $ 5,600 158 200 15,000 6,100 201 212 2,400 230 600 301 13,000 7,000 306 400 61,000 Advertising expense Supplies expense Depreciation expense Insurance expense Salaries expense Interest expense 610 8,400 631 4,000 711 5,600 722 3,500 726 28,000 905 600 Totals $103,700 $103,700