Reference no: EM133143484

Question - Presented below is the entity's balance sheet account as of October 31, 20x1. And a summary of transactions that occurred during November 20x1.

Cash $39,000

Accounts Receivable 90,000

Inventory 70,000

Prepaid Rent 2,000

Accounts Payable $25,000

Paid-in capital 160,000

Retained Income 16,000

$201,000 $201,000

Following is a summary of the transactions that occurred during November:

a. Collections of accounts receivable, $80,000.

b. Payments of accounts payable, $19,000.

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 $80,000.

e. Recognition of rent expense for November, $1,000.

f. Wages paid in cash for November, $5,000.

g. Cash dividends declared and disbursed to stockholders on November 29, $12,000.

Required -

1. Prepare journal entries.

2. Prepare the ledgers using the running balance format. Post the journal entries and use the transaction letters to key in your postings.

3. Prepare a trial balance, November 30, 20x1.

4. Explain why accounts payable increased by so much during November.