Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 49

Accounting for Business Operations
Starting in May 2013, Nicole has decided that she has everything that she needs to open her doors to customers. To keep up with competition, Nicole has added gift certificates and has started to advertise her company more to keep her business going in the long term. Here is a sample of some transactions that occurred in the month of May at Nicole's Getaway Spa (NGS).

Required:
1. For each of the transactions prepare journal entries, using the date of the transaction as the reference.
2. Calculate NGS's preliminary net income and net profit margin for the month.
3. Which of the following best describes the adjustment(s) that will have to be made before the income statement is finalized
a. Record supplies used up in May.
b. Record income taxes on May's net income.
c. All of the above.
d. None of the above.