Answer:
Journal entries
Feb 01
Rent Expense Debit $ 200
Cash Credit $ 200
Record payment of hanger rent for Feb
Feb 04
Cash Debit $ 800
Unearned Revenue Credit $ 800
Recording of cash received in advance
Feb 7
Cash Debit $ 900
Service Revenue Credit $ 900
To record service revenue received in cash
Feb 10
Salaries and wages Debit $ 1,200
Cash Credit $ 1,200
To record salaries paid for services received in February
Feb 14
Advertisement expenses Debit $ 100
Cash Credit $ 100
To record payment of advertisement expenses
Feb 18
Cash Debit $ 500
Accounts Receivables Debit $ 1,200
Service Revenue Credit $ 1,700
To record services provided on cash and on credit
Feb 25
Supplies Inventory Debit $ 1,350
Accounts Payable Credit $ 1,350
Recording of purchase of supplies for future use on credit
The preliminary net income for February is $ 1,100
The net profit margin is 42.3 %
Explanation:
Computation of net income and net profit margin
Revenues ( $ 900 + $ 1,700 ) $ 2,600
Expenses ($ 200 + $ 1,200 + $ 100 ) <u>$ 1,500</u>
Net Income $ 1,100
Net profit margin = Net income / Revenues
Net Profit margin = $ 1,100/ $ 2,600 = 42.3 %
The other entries for collections made on Feb 04 for services to be performed next month and the purchase of supplies to be used in the future are not to be considered in revenues and expenses as they do not pertain to the current month
