4-5A (Algo) Preparing adjusting entries and income statements; computing gross margin, acid-test, and current ratios LO A1, P3, P4 Skip to question [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. NELSON COMPANY Unadjusted Trial Balance January 31 Debit Credit Cash $ 21,200 Merchandise inventory 12,500 Store supplies 5,400 Prepaid insurance 2,100 Store equipment 42,900 Accumulated depreciationStore equipment $ 17,200 Accounts payable 15,000 Common stock 4,000 Retained earnings 29,000 Dividends 2,050 Sales 116,400 Sales discounts 1,850 Sales returns and allowances 2,100 Cost of goods sold 38,000 Depreciation expenseStore equipment 0 Sales salaries expense 15,550 Office salaries expense 15,550 Insurance expense 0 Rent expenseSelling space 6,500 Rent expenseOffice space 6,500 Store supplies expense 0 Advertising expense 9,400 Totals $ 181,600 $ 181,600 Additional Information: Store supplies still available at fiscal year-end amount to $2,900. Expired insurance, an administrative expense, is $1,450 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 $10,500 of inventory is still available at fiscal year-end. Using the above information, prepare adjusting journal entries. Prepare a multiple-step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses. Prepare a single-step income statement for the year ended January 31