Question

Rowland & Sons Air Transport Service, Inc., has been in operation for three years. The following transactions occurred in February: Feb. 1 Paid $200 for rent of hangar space in February. Feb. 4 Received customer payment of $800 to ship several items to Philadelphia next month. Feb. 7 Flew cargo from Denver to Dallas; the customer paid in full ($900 cash). Feb.10 Incurred and paid $1,200 in pilot wages for flying in February. Feb. 14 Paid $100 for an advertisement run in the local paper on February 14. Flew cargo for two customers from Dallas to Albuquerque for $1,700; one customer paid $500 cash and the other Feb. 18 asked to be billed $1,200. Feb. 25 Purchased on account $1,350 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 2 Required 3 Prepare accrual basis journal entries for each transaction. (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 X No Date General Journal Debit Credit 1 Feb 01 Cash 200 2 Feb 04 Deferred Revenue 800 3 Feb 07 Service Revenue 900 4 Feb 10 Salaries and Wages Expense 1,200 5 Feb 14 Advertising Expense 100 6 Feb 18 Accounts Receivable 500 1.200 7 Feb 25 Supplies 1,350 < Required 1 Required 2

Answer 1

1-Feb	Rent expense	200
	Cash		200
4-Feb	Cash	800
	Unearned freight revenue		800
7-Feb	Cash	900
	Freight revenue		900
10-Feb	Wages and salaries expense	1,200
	Cash		1,200
14-Feb	Advertisement expenses	100
	Cash		100
18-Feb	Cash	500
	Freight revenue		500
	Accounts receivable	1,200
	Freight revenue		1,200
25-Feb	Supplies	1,350
	Accounts Payable		1,350

2

Net Income = Revenue - Expense

Revenue =900+500+1200 = 2600

Expense = =200+1200+100 = 1500

Then Income = 1100

3

Net Profit margin = 1100 / 2600 x 100% = 42.31%