Financial and Managerial Accounting (7th Edition) Chapter 4, Problem 5PA

Chapter 4, Problem 5PA (1 Bookmark) Show all steps: NELSON COMPANY Unadjusted Trial Balance January 31, 2017 Dobit $ 1.000 12,500 Credit 3 Merchundise Store supplies Prepaid insurance 2.400 Store equipment 7Accumulated depreciation-Store equipment 8 Accounts payable 9 Comrnon stock 10 Retained earnings 1 Dividends S 15,250 10,000 5,000 111,950 13 Sales discounts 14 Sales returns and allowances 15 Cost of goods sold 16 Depreciation expense Store equipment 17 Salaries expense 18 Insurance expense 19 Rent expense 20 Store supplies expense z1 Advertising expense 22 Totals 38,400 35,000 15,000 9.800 169.200 Rent expense and salaries expense are equally divided between selling activities and genera and administrative activities. Nelson Company uses a perpetual inventory system. Required 1. Prepare adjusting journal entries to reflect each of the following: a. Store supplies still available at fiscal year-end amount to $1,750 b. Expired insurance, an administrative expense, for the fiscal year is S1,400 c. Depreciation expense on store equipment, a selling expense, is $1,525 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows 10,900 of inventory is still available at fiscal year-end. 2. Prepare a multiple-step income statement for fiscal year 2017 that begins with gross sales and includes separate categories for net sales, cost of goods sold, selling expenses, and general and 3. Prepare a single-step income statement for fiscal year 2017 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2017 (Round ratios to two decimals.)