Reference no: EM131256780
Barbara Jones opened Barb’s Book Business on February 1. You have been hired to maintain the company’s financial records. The following transactions occurred in February, the first month of operations.
1. Received shareholders’ cash contributions on February 1 totaling $23,000 to form the corporation; issued 1,000 shares of common stock.
2. Paid $2,625 cash on February 2 for three months’ rent for office space.
TIP: For convenience, simply record the full amount of the payment as an asset (Prepaid Rent). At the end of the month, this account will be adjusted to its proper balance.
3. Purchased supplies on February 3 for $330 cash.
4. Signed a promissory note on February 4, payable in two years; deposited $15,600 in the company’s bank account.
5. On February 5, purchased equipment for $5,400 and land for $10,200.
6. Placed an advertisement in the local paper on February 6 for $740 cash.
7. Recorded sales on February 7 totaling $3,950; $1,700 was in cash and the rest on accounts receivable.
8. Collected accounts receivable of $114 from customers on February 8.
9. On February 9, repaired one of the computers for $139 cash.
10. Incurred and paid employee wages on February 28 of $850.
TIP: Most repairs involve costs that do not provide additional future economic benefits.
Required:
1. Prepare the journal entry for each of the above transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.
2. Post the transaction activity from requirement 1 to the T-Accounts below. All accounts begin with zero balances because this is the first month of operations.
3. Prepare an unadjusted trial balance at the end of February.
4-a. Refer to the revenues and expenses shown on the unadjusted trial balance. Based on this information, calculate preliminary net income and net profit margin? (Round your Net Profit Margin answer to 1 decimal place.)
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