Question

I am unsure if this is correct, please check and complete the net income/ explain how its done!! Thank you!!
Junktrader is an online company that specializes in matching buyers and sellers of used items. Buyers and sellers can purchase a membership with Junktrader, which provides them advance notice of potentially attractive offers. a. Junktrader provided online advertising services for another company for $365 on account. b. On the last day of the month, Junktrader paid $80 cash to run an ad promoting the company's services. The ad ran that day in the local newspaper. c. Received $320 cash in membership fees for the month from new members. d. Received an electricity bill for $145 for usage this month. The bill will be paid next month. e. Billed a customer $188 for helping sell some junk. Junktrader expects to receive the customer's payment by the end of next month. Required: 1. Prepare journal entries for the above transactions, which occurred during a recent month. 2. Determine Junktrader's preliminary net income. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare journal entries for the above transactions, which occurred during a recent month. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list View journal entry worksheet No Transaction General Journal Credit Debit 365 A . Accounts Receivable Service Revenue 365 2b. Advertising Expense Cash 3 C. Cash Service Revenue 320 145 Utilities Expense Accounts Payable 145 5 Accounts Receivable 188 Service Revenue 188 Required 1 Required 2 >

Answer 1

Answer 1:

No Debit Credit Transaction a. General Journal Accounts Receivable Advertising (or Service) Revenue 365 365 80 Advertising Expense Cash Cash Membership (or Service) Revenue 320 145 Utilities Expense Accounts Payable 188 Accounts Receivable Service Revenue 188

Answer 2:

Preliminary Net Income $ 648

Working:

Net Income = Revenue - Expense

From above journals we find:

Revenue = 365 + 320 + 188 = $873

Expenses = 80 + 145 = $225

Net Income = 873 - 225 = $648