Problem 5-5A Preparing adjusting entries and income statements; computing gross margin, acid-test, and current ratios A1 P3 P4 Check (2) Gross profit, $67,750 (3) Total expenses, $106,775; Net income, $975 The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company. Nelson Com- pany uses a perpetual inventory system. It categorizes the following accounts as selling expenses: Depre- ciation Expense-Store Equipment, Sales Salaries Expense, Rent Expense-Selling Space, Store Supplies Expense, and Advertising Expense. It categorizes the remaining expenses as general and administrative. NELSON COMPANY Unadjusted Trial Balance January 31 Cash Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation-Store equipment Accounts payable J. Nelson, Capital J. Nelson, Withdrawals Sales Sales discounts Sales returns and allowances Cost of goods sold Depreciation expense-Store equipment Sales salaries expense Office salaries expense Insurance expense Rent expense-Selling space Rent expense-Office space Store supplies expense Advertising expense Totals Debit $ 1,000 12,500 5,800 2,400 42,900 2,200 2,000 2,200 38,400 0 17,500 17,500 0 7,500 7,500 0 Credit $ 15,250 10,000 32,000 111,950 9,800 $169,200 $169,200 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, is $1,400 for the fiscal year. 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 the year ended January 31 that begins with gross sales and includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses. 3. Prepare a single-step income statement for the year ended January 31. 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31. (Round ratios to two decimals.)

Problem 5.5.A Preparing adjusting entrios and income statements: computing gross margin. acid test, and current ratios A1P3P4 The following tanadjusted trial balance is prepared at fiscal year end for Nelwon Company, Nelwon Cois: pany uses a perpetual imventory system. It categorizes the following accouns as selRng expenves: Depre: ciation Expense-Stone Equipenent, Sales Salaries Expense. Rent Bxpenie_Selling-Space. Sicre Supplaes Expense, and Advertisiag Expense. It categorires the remaining expenics as general and administrative. 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, is $1,400 for the fiscal year. c. Depreciation expense on store equipment, a selling expense, is $1.525 for the fiseal 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. Check (2) Gross proft, 567.750 (3) Total expenses, $106,775 : Net income, 5975 2. Prepare a multiple-step income statement for the year ended January 31 that begins with gross sales and includes separate categories for net sales, cost of goods sold, selling expenses, and general and auministrative expenses. 3. Prepare a single-step income statement for the year ended January 31. 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31 . (Round ratios to two decimals.) Problem 5.5.A Preparing adjusting entrios and income statements: computing gross margin. acid test, and current ratios A1P3P4 The following tanadjusted trial balance is prepared at fiscal year end for Nelwon Company, Nelwon Cois: pany uses a perpetual imventory system. It categorizes the following accouns as selRng expenves: Depre: ciation Expense-Stone Equipenent, Sales Salaries Expense. Rent Bxpenie_Selling-Space. Sicre Supplaes Expense, and Advertisiag Expense. It categorires the remaining expenics as general and administrative. 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, is $1,400 for the fiscal year. c. Depreciation expense on store equipment, a selling expense, is $1.525 for the fiseal 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. Check (2) Gross proft, 567.750 (3) Total expenses, $106,775 : Net income, 5975 2. Prepare a multiple-step income statement for the year ended January 31 that begins with gross sales and includes separate categories for net sales, cost of goods sold, selling expenses, and general and auministrative expenses. 3. Prepare a single-step income statement for the year ended January 31. 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31 . (Round ratios to two decimals.) Problem 5.5A Preparing adjusting entries and income statements; computing gross margin. acid-test, and current ratios A1P3P4 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 Expense-Store Equipment, Sales Salaries Expense, Rent Expense-Selling Space, Store Supplies Expense, and Advertising Expense. It categorizes the remaining expenses as general and administrative. 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, is $1,400 for the fiscal year. 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. Check (2) Gross profl. $67.750 (3) Total erpenses, 5106.775 . Net income 5975 2. Prepare a multiple-step income statement for the year ended January 31 that begins with gross sales and includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses. 3. Prepare a single-step income statement for the year ended January 31. 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31 . (Round ratios to two decimals.) Problem 5.5A Preparing adjusting entries and income statements; computing gross margin. acid-test, and current ratios A1P3P4 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 Expense-Store Equipment, Sales Salaries Expense, Rent Expense-Selling Space, Store Supplies Expense, and Advertising Expense. It categorizes the remaining expenses as general and administrative. 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, is $1,400 for the fiscal year. 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. Check (2) Gross profl. $67.750 (3) Total erpenses, 5106.775 . Net income 5975 2. Prepare a multiple-step income statement for the year ended January 31 that begins with gross sales and includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses. 3. Prepare a single-step income statement for the year ended January 31. 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31 . (Round ratios to two decimals.) Problem 5.5A Preparing adjusting entries and income statements computing gross margin, acid test, and current ratios A1 P3 P4 The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company. Nelson Com. pany uses a perpetual imventory system. It eategorizes the following accounts as selling expenses: Depreciation Expense - Store Equipment, Sales Salaries Expense, Rent Expense-Selling Space, Store Supplies Expense, and Advertising Expense, It categorizes the remaining expenses as general and administrative. 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, is $1,400 for the fiscal year. 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. Check (2) Gross profie $67.750 (9) Total expenses, \$106,775: Net income, $975 2. Prepare a multiple-step income statement for the year ended January 31 that begins with gross sales and includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses. 3. Prepare a single-step income statement for the year ended January 31. 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31 . (Round ratios to two decimals.)