Barbara Jones opened Barbs Book Business on February 1. You have been hired to maintain the companys financial records. The following transactions occurred in February, the first month of operations.

1. a. Received shareholders cash contributions on February 1 totaling $10,000 to form the corporation; issued 1,000 shares of common stock.

2. b. Paid $3,270 cash on February 2 for three months rent for office space.

3. 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.

4. c. Purchased and received supplies on February 3 for $455 cash.

5. d. Signed a promissory note on February 4, payable in two years; deposited $17,500 in the companys bank account.

6. e. On February 5, paid cash to buy equipment for $5,900 and land for $11,600.

7. f. Placed an advertisement in the local paper on February 6 for $895 cash.

8. g. Recorded sales on February 7 totaling $3,700; $2,500 was in cash and the rest on accounts receivable.

9. h. Collected accounts receivable of $125 from customers on February 8.

10. i. On February 9, repaired one of the computers for $116 cash.

11. TIP: Most repairs involve costs that do not provide additional future economic benefits.

12. j. Incurred and paid employee wages on February 28 of $710.

Required:

1. 1. Prepare the journal entry for each of the above transactions.

2. 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. 3. Prepare an unadjusted trial balance at the end of February.

4. 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?

5. 4-b. Determine whether the net profit margin is better or worse than the 10.5 percent earned by a close competitor.