Problem 4-5A Preparing adjusting entries and income statements; computing gross margin, acid-test, and current ratios LO A1, A2, P3, P4

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[The following information applies to the questions displayed below.] The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company. Nelson company uses a perpetual inventory system. It categorizes the following accounts as selling expenses: Depreciation ExpenseStore Equipment, Sales Salaries Expense, Rent ExpenseSelling Space, Store Supplies Expense, and Advertising Expense. It categorizes the remaining expenses as general and administrative.

Additional Information:

1. Store supplies still available at fiscal year-end amount to $1,700.
2. Expired insurance, an administrative expense, is $1,600 for the fiscal year.
3. Depreciation expense on store equipment, a selling expense, is $1,625 for the fiscal year.
4. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,600 of inventory is still available at fiscal year-end.

Journal Entry Worksheet

Store supplies still available at fiscal year-end amount to $1,700.

Expired insurance, an administrative expense, is $1,600 for the fiscal year.

Depreciation expense on store equipment, a selling expense, is $1,625 for the fiscal year.

To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,600 of inventory is still available at fiscal year-end.

NELSON COMPANY Unadjusted Trial Balance January 31 Credit Debit $ 22,200 13,000 5,900 2,500 43,000 Cash Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation-store equipment Accounts payable Common stock Retained earnings Dividends Sales Sales discounts Sales returns and allowances Cost of goods sold Depreciation expense-Store equipment Sales salaries expense $ 17,200 16,000 6,000 27,000 2,050 114,550 1,950 2,250 38,000 13,250 13,250 13,250 Sales salaries expense Office salaries expense Insurance expense Rent expense-selling space Rent expense-office space Store supplies expense Advertising expense Totals 7,000 7,000 9,400 $180,750 $180,750 NELSON COMPANY Income Statement For Year Ended January 31 0 0 0 Expenses Selling expenses Selling expenses Total selling expenses General and administrative expenses Total general and administrative expenses 0 Total expenses 0 NELS ANY Income Statement For Year Ended January 31 Expenses Total expenses 0