Project 1 in eCampus requires you to record transactions, prepare the financial statements, and answer questions based
on these transactions. You should record the transactions in the accounting equation below before inputting your
answers into eCampus. This must be your own work; working with others is considered academic dishonesty.
Be sure to use the Chart of Accounts below so as not to lose points for using the wrong account titles.
Chart of Accounts
Accumulated Depreciation
Dividends
Note Payable
Sales Revenue
Cash
Equipment
Common Stock
Wages Expense
Inventory
Cost of Goods Sold
Interest Expense
Depreciation Expense
Interest Payable
During April, its first month of
business, Karry-no-key, Inc.: Assets Cash
1 2 3 Issued $8,000 of stock to its
owners, Carrie Oakey and
Justin Tune, in exchange for
cash.
Received an $8,000, 6% cash
loan from the bank on April 1.
The interest and principal are
due June 30.
Paid $3,000 for 100 karaoke
machines it plans to sell. 4 Purchased a display stand by
paying $12,000 on April 1. 5 Sold 80 karaoke machines at a
sales price of $70 each for cash.
Record the sale and the cost of
the sale. 6 Paid $900 at the end of the
month to its employee for
services performed in April.
7 Adjusted for $100 of
depreciation on its equipment
(=($12,000/10 years of
usefulness) x 1/12 year).
8 9 Adjusted for the $40 (=$8,000 x
6%/year x 1/12 year) of interest
owed on the bank loan. The
interest and principal will be
paid on June 30.
Paid a $100 cash dividend to its
shareholders. Other Assets Liabilities Shareholder’s Equity Common
Stock Retained Earnings Using the above transactions, prepare the following four financial statements:
Karry-no-key, Inc.
Income Statement
For the Month Ended April 30 Karry-no-key, Inc.
Statement of Shareholders' Equity
For the Month Ended April 30 Sales Revenue Beginning Common Stock Cost of Goods Sold 0 $ 0 Stock Issued Gross Profit Ending Common Stock Wages Expense Beginning Retained Earnings Depreciation Expense Net Income Operating Income Dividends Interest Expense Ending Retained Earnings Net Income Total Shareholders' Equity
Karry-no-key, Inc.
Statement of Cash Flows
For the Month Ended April 30 Cash from Operating Activities:
Cash Collected from Customers
Cash Paid for Inventory
Cash Paid for Wages
Total Cash from Operating Activities
Cash from Investing Activities
Purchase of Equipment
Cash from Financing Activities
Issuance of Stock
Proceeds from loan
Dividends Paid
Net Cash from Financing Activities
Net Change in Cash
Plus Beginning Cash Balance
Ending Cash Balance $ 0 Karry-no-key, Inc.
Balance Sheet
April 30
Cash Notes Payable Inventory Interest Payable
Common Stock Equipment, Net of accumulated Depreciation
Total Assets $ Retained Earnings
Total Liabilities and
Shareholders' Equity There will be additional questions you will need to answer in Project 1 (click on Project 1).

 

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