An analysis of transactions made during July by NepCo, an Internet service provider, during its first month of operations is shown below. Increases and decreases affecting revenues and expenses are explained.

Required:

1. Describe the business activities that led to the accounting equation effects for each transaction shown above.

2. Prepare an income statement and a statement of retained earnings for July, and a classified balance sheet as of July 31. (These financial statements would be considered preliminary because they use unadjusted balances.)

3. Calculate the net profit margin, expressed as a percent (to one decimal place). Is NepCo more or less profitable than its competitor, which earned a net profit margin of 25.0 percent?