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

[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 Unadjusted Trial Balance January 31, 2017
	Debit			Credit
Cash	$	3,000
Merchandise inventory		14,000
Store supplies		5,700
Prepaid insurance		2,300
Store equipment		42,700
Accumulated depreciationStore equipment				$	17,700
Accounts payable					12,000
J. Nelson, Capital					19,000
J. Nelson, Withdrawals		2,250
Sales					115,550
Sales discounts		1,950
Sales returns and allowances		2,150
Cost of goods sold		38,000
Depreciation expenseStore equipment		0
Salaries expense		26,900
Insurance expense		0
Rent expense		16,000
Store supplies expense		0
Advertising expense		9,300
Totals	$	164,250		$	164,250

Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Nelson Company uses a perpetual inventory system.

Additional Information:

Store supplies still available at fiscal year-end amount to $2,750.

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

Depreciation expense on store equipment, a selling expense, is $1,575 for the fiscal year.

To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,300 of inventory is still available at fiscal year-end.