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.
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. Explain to D. Thao why this is necessary.

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Account No. 101 112 126 130 157 158 200 201 212 230 301 306 400 610 631 711 722 726 905 Account Titles Cash Accounts receivable Supplies Prepaid insurance THAO COMPANY Adjusted Trial Balance December 31, 2024 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 Totals Dr. $ 5,300 10,800 1,500 2,000 27,000 7,000 8,400 4,000 5,600 3,500 28,000 600 $103,700 Cr. $ 5,600 15,000 6,100 2,400 600 13,000 61,000 $103,700