3-38 Financial Statements (QUESTION)

Refer to problem 3-37. Prepare a balance sheet as of November 30, 20X0, and an income statement for the month of November. Prepare the retained earnings column of a statement of stockholders equity. Prepare the income statement first.

3-37 Journal, Ledger, and Trial Balance (REFERENCE)

(Alternates are 3-39 through 3-44.) 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.

\begin{tabular}{lrr} \hline Cash & $41,000 & \\ Accounts receivable & 90,000 & \\ Inventory & 70,000 & \\ Prepaid rent & 2,000 & \\ Accounts payable & & $27,000 \\ Paid-in capital & & 160,000 \\ Retained earnings & & 16,000 \\ & $203,000 & $203,000 \\ \hline \end{tabular}