The adjusted trial balance columns of the work sheet for Thao Company, owned by D. Thao, are 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 affected by the closing entries.)
(c) Prepare a post-closing trial balance?
Taking It Further
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. Please explain to D. Thao why this is necessary?

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THAO COMPANY Work Sheet For the Year Ended December 31,2017 Adjusted Trial Balance Dr. 5,300 Account No. 101 112 126 130 157 158 200 201 212 230 301 306 400 610 631 Account Titles Cr. Cash Accounts receivable Supplies Prepaid insurance Equipment Accumulated depreciation-equipment Notes payable Accounts payable Salaries payable Interest payable D. Thao, capital D. Thao, drawings Service revenue Advertising expense Supplies expense Depreciation expense Insurance expense Salaries expense Interest expense 10,800 1,500 2,000 27,000 5,600 15,000 6,100 2,400 600 13,000 7,000 61,000 8,400 4,000 5,600 3,500 28,000 600 103,700 722 726 905 Totals 103,700