Question

(The following information applies to the questions displayed below.) An analysis of transactions made during July by NepCo, an Internet service provider, during its first month of operations is shown below. Increases and decreases affecting revenues and expenses are explained. Stockholders' Equity Assets Accounts Receivable Supplies Liabilities Accounts Payable Cash Equipment Retained Earnings 16,0 Common Stock +16,000 +915 -915 Utilities expense +6,900 Service revenue +11,9ee - 7.100 1.1 +1,180 Service revenue gasessecse +4,800 +905 -3,600 -3,500 -2.780 -2,780 Wage expense -840 Rent expense 2,000 - 4.9 11,90€ 3.020 16,000 3,545 E3-20 Part 1 Required: 1. Describe the business activities that led to the accounting equation effects for each transaction shown above. State Activities ag Sesso

Answer 1

E3-20 Parti Financial Statements a. b. Activities Issue of Common Stock for Cash, $ 16000 Utility Expenses is yet to be paid, $ 915 Provided Service on Account, $ 6900 Purchase of Equipment costing $ 11900 in exchange of Cash $ 7100 and remaining on Account 4800 Provided Service for Cash, $ 1180 Purchase of Supplies on Account $ 905 Paid Cash for Accounts payable, $ 3600 Paid Wages Expenses $ 2780 Paid Rent Expenses , $ 840 Received Cash from Accounts Receivable $ 2070 -- E3-20 part 2-b Statement of Retained Earnings Retained earnings ,July1 Add: Net Income Less: Dividend Retained earnings July 31 $ 3,545 $ 3,545

E3-20 part 2-c E3-20 part3 Net Profit margin Net Income/ Sales *100 =3545/6900+1180)*100 =3545/8080*100% =43.874% 3-b Our Net Profit margin is 25% which is more than Competitor Assets Current Assets Cash $ 4,930 Accounts Receivable $ 4,830 Supplies $ 905 Total Current Assets Equipment Total Assets Liabilities & stockholder's Equity Current Liabilities Accounts Payable Stockholder's Equity Common Stock Retained Earnings TotalLiabilities & stockholder's Equity $ $ $ 10,665 11,900 22,565 $ 3,020 $ $ $ 16,000 3,545 22,565