1)The following information applies to the questions displayed below

1)

If sales decine to 900 units, the net operating income would be $2,550.

Explanation:

A contribution format income statement shows the effect of changes in selling units, selling price, variable expenses and fixed expenses in the net operating income of the business.

From the given information,
Selling price per unit = Sales / Units sold = $85,000 / 1,000 = $85
Variable expenses per unit = Sales / Units sold = $59,500 / 1,000 = $59.50
Contribution margin per unit = Selling price per unit - Variable expenses per unit = $85 - $59.50 = $25.50

Fixed expenses = $20,400

If sales decline to 900 units, the contribution margin would be,
Contribution margin = Contribution margin per unit × Units sold = $25.50 × 900 = $22,950

Net operating income = Contribution margin - Fixed expenses
= $22,950 - $20,400 = $2,550

2)

The purchase of supplies on account should result in a debit to Supplies and a credit to Accounts Payable

• Supplies are inventory of consumables such as paper for printing, cleaning supplies, etc. They are initially recorded as an asset (current asset). Since the purchase is made on account, Accounts payable is credited.

At the end of the period, the inventory count of supplies in hand is performed and supplies consumed are written off as supplies expense:

• Supplies consumed or Supplies expense = Beginning supplies + Purchase - Ending supplies

please see the attached file.