Question

Please answer and show detail.

2.Calculate the company’s preliminary net income

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

Answer 1

Ans- Journal Entries

Date	Account Title	Debit ($)	Credit ($)
Feb. 1	Rent Expenses A/c Dr.	555
	Cash A/c		555
	(To record paid rent)
Feb.4	Cash A/c Dr.	1,100
	Unearned Service Revenue A/c		1,100
	(To record unearned service revenue)
Feb.7	Cash A.c Dr.	1,100
	Service Revenue		1,100
	(To record the cash received from customer)
Feb.10	Wages A/c Dr.	1,850
	Cash A/c		1,850
	(To record wages paid)
Feb.14	Advertisement Expenses A/c Dr.	164
	Cash A/c		164
	(To record the advertisement expenses paid)
Feb. 18	Cash A/c Dr.	825
	Accounts Receivable A/c Dr.	1,540
	Service Revenue		2,365
	(To record the service revenue)
Feb.25	Supplies A/c Dr.	1,570
	Accounts Payable		1,570
	(To record of purchase supplies on account)

2- Company's preliminary net income:-

Service Revenue ($1,100+$2,365)		$3,465
Less: Expenses:-
Rent Expenses	$555
Wages	$1,850
Advertisement Expenses	$164
Total Expenses		$2,569
Company' preliminary net income		$896

3-Company's net profit margin= Company's preliminary net income/ Service Revenue

= $896/ $3,465

= 25.86%

Thus, company's net profit margin is 25.86%

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