Rowland & Sons Air Transport Service, Inc., has been in operation for three year

Question

Rowland & Sons Air Transport Service, Inc., has been in operation for three years. The following transactions occurred in February: Feb. 1 Paid $390 for rent of hangar space in February Feb. 4 Received customer payment of $710 to ship several items to Philadelphia next month. Feb. 7 Plew cargo from Denver to Dallas; the customer paid in full (,070 cash). Feb.10 Incurred and paid $2,000 in pilot vages for flying in February Feb.14 Paid $168 for an advertisenent run in the local paper on February 14. Plev cargo for two customers from Dallas to Abuquerque for $1,950; one customer paid $590 cash and the other Feb.18 asked to be billed $1,360. Feb.25 Purchased on account $1,725 in supplies for future use on the planes. Required 1. Prepare accrual basis journal entries for each transaction. 2. Calculate the company's preliminary net income. 3. Calculate the company's net profit margin expressed as a percent Complete this question by entering your answers in the tabs below Required 1 Required 2Required 3 Calculate the company's preliminary net income Net Income

Explanation / Answer

1 In the Books of Rowland & Sons Air Transport Service, Inc Date Particulars Debit Credit 1-Feb Rent Expense $390 To Cash A/c $390 4-Feb Cash A/c Dr. $710 To Customer Advance $710 7-Feb Cash A/c Dr $1,070 To Service Revenue $1,070 10-Feb Wages A/c Dr. $2,000 To Cash A/c $2,000 14-Feb Advertisement A/c Dr $168 To Cash A/c $168 18-Feb Cash A/c Dr. $590 Accounts Receivable A/c Dr. $1,360 To Service Revenue $1,950 25-Feb Supplies A/c Dr. $1,725 To Cash A/c $1,725 2 Calculation of Company Preliminary Net Income Service Revenue $3,020 Less: Expenses Rent Expense $390 Wages Exp $2,000 Advertisement Exp $168 Net Income $462 3 Net Profit Margin = Net Income / Service Revenue *100 15.30% 1 Calculation of NSG, Inc Preliminary Net Income Service Revenue $750 Less: Expenses Utilities Exp $400 Advertisement Exp $30 Net Income $320 Net Profit Margin = Net Income / Service Revenue *100 42.67%

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