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

Question

Rowland & Sons Air Transport Service, Inc. has been in operation for three years. The following transactions occurred in February:

Paid $395 for rent of hangar space in February.

Received customer payment of $1,680 to ship several items to Philadelphia next month.

Flew cargo from Denver to Dallas; the customer paid in full ($1,030 cash).

Paid pilots $1,250 in wages for flying in February.

Paid $102 for an advertisement run in the local paper on February 14.

Flew cargo for two customers from Dallas to Albuquerque for $2,865; one customer paid $845 cash and the other asked to be billed $2,020.

Purchased on account $1,795 in supplies for future use on the planes.

Calculate the company’s preliminary net income

Calculate the company’s net profit margin expressed as a percent. (Round your answer to 1 decimal place.)

Rowland & Sons Air Transport Service, Inc. has been in operation for three years. The following transactions occurred in February:

Explanation / Answer

1)

Company’s preliminary net income = Service Revenue - Rent Expenses - Wages - Advertisement

Company’s preliminary net income = (1030+2865) - 395 - 1250 - 102

Company’s preliminary net income = 2148

2)

company’s net profit margin = Company’s preliminary net income /Service Revenue

company’s net profit margin = 2148 / (1030+2865)

company’s net profit margin = 55.15%

Journal Entry

Date Account Title Debit Credit Feb. 1 Rent Expenses 395 Cash 395 Feb. 4 Cash 1680 Unearned Service Revenue 1680 Feb. 7 Cash 1030 Service Revenue 1030 Feb. 10 Wages 1250 Cash 1250 Feb. 14 Advertisement 102 Cash 102 Feb. 18 Cash 845 Account Recievable 2020 Service Revenue 2865 Feb. 25 Supplies 1795 Accounts Payable 1795

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.