Chart of Accounts
Accounts Payable		Depreciation Expense		Inventory
Accounts Receivable		Dividends		Notes Payable
Accumulated Depreciation		Equipment		Prepaid Insurance
Cash		Insurance Expense		Sales Revenue
Common Stock		Interest Expense		Wages Expense
Cost of Goods Sold		Interest Payable		Wages Payable

Assets	Liabilities	Shareholders Equity
Balance sheet at May 1	5,600 Cash 600 Inventory 11,900 Equipment, Net	8,000 Notes Payable 40 Interest Payable	8,000 Common Stock 2,060 Retained Earnings
Purchased 200 karaoke machines for $6,000 on account.
Paid $2,400 cash for six months of insurance coverage that begins May 1.
Sold 150 karaoke machines on account. The sales price was $70 and the cost was $30 per machine. Record both the sale and the cost of the sale.
Collected $2,500 of its accounts receivables from the sales made on account.
Paid for $5,000 of the inventory purchased on account earlier.
Declared and paid a $300 cash dividend to its shareholders.
Adjusted for insurance used during the month that was paid at the beginning of the month.
Adjusted for $100 of depreciation on its equipment (= ($12,000/10 years of usefulness) x 1/12 year.
Adjusted for $900 of wages owed that will be paid in the first week of June.
Adjusted for the $40 (=$8,000 x 6%/year x 1/12 year) of interest owed on the bank loan due June 30.

Using the May transactions, prepare the following four financial statements:

Karry-no-key, Inc. Income Statement For the Month Ended May 31		Karry-no-key, Inc. Statement of Shareholders' Equity For the Month Ended May 31
Sales Revenue			Beginning Common Stock	$ 8,000
Cost of Goods Sold			Stock Issued	0
Gross Profit			Ending Common Stock
Insurance Expense			Beginning Retained Earnings	$ 2,060
Depreciation Expense			Net Income
Wages Expense			Dividends
Operating Income			Ending Retained Earnings
Interest Expense			Total Shareholders' Equity
Net Income

Karry-no-key, Inc. Statement of Cash Flows For the Month Ended May 31
Cash from Operating Activities:
Cash Collected from Customers
Cash Paid for Inventory
Cash Paid for Insurance
Total Cash from Operating Activities
Cash from Investing Activities	$ 0
Cash from Financing Activities
Dividends Paid
Net Change in Cash
Plus Beginning Cash Balance	5,600
Ending Cash Balance

When completing the balance sheet, do not forget to include the beginning balances.

Karry-no-key, Inc. Balance Sheet May 31
Cash		Accounts Payable
Accounts Receivable		Wages Payable
Inventory		Notes Payable
Prepaid Insurance		Interest Payable
Equipment, Net of Accumulated Depreciation		Common Stock
Retained Earnings
Total Assets		Total Liabilities and Shareholders' Equity