The balance sheet accounts of Detroit Machinery, Inc., had the following balances on October 31, 20X0: Following

Question:

The balance sheet accounts of Detroit Machinery, Inc., had the following balances on October 31, 20X0:

Following is a summary of the transactions that occurred during November:
a. Collections of accounts receivable, $75,000.
b. Payments of accounts payable, $14,000.
c. Acquisitions of inventory on open account, $80,000.
d. Merchandise carried in inventory at a cost of $70,000 was sold on open account for $96,000.
e. Recognition of rent expense for November, $1,000.
f. Wages paid in cash for November, $8,000.
g. Cash dividends declared and disbursed to stockholders on November 29, $10,000.

Required
1. Prepare journal entries.
2. Enter beginning balances in T-accounts. Post the journal entries to T-accounts. Use the transaction letters to key your postings.
3. Prepare a trial balance for the month ending November 30, 20X0.
4. Explain why accounts payable increased by so much during November.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...