Chapter 3, Problem 12E

Recording Journal Entries and Determining Net Income and Net Profit Margin

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	Paid pilots $1,200 in wages for flying in February.
Feb. 14	Paid $100 for an advertisement run in the local paper on February 14.
Feb. 18	Flew cargo for two customers from Dallas to Albuquerque for $1,700; one customer paid $500 cash and the other asked to be billed $1,200.
Feb. 25	Purchased on account $1,350 in supplies for future use on the planes.

Required:

Prepare accrual basis journal entries for each transaction. Be sure to categorize each account as an Asset (A), Liability (L), Stockholders’ Equity (SE), Revenue (R), or Expense (E). Also, calculate the company’s preliminary net income and net profit margin expressed as a percent (to one decimal place).