5-5A (Algo) Preparing adjusting entries and income statements; computing gross margin, acid- test, and current ratios LO A1, 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 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. NELSON COMPANY Unadjusted Trial Balance January 31 Debit Credit Cash $ 19,350 Merchandise inventory 14,500 Store supplies 5,000 Prepaid insurance 2,100 Store equipment 42,900 Accumulated depreciation-Store equipment $ 16,100 Accounts payable 18,000 J. Nelson, Capital 31,000 J. Nelson, Withdrawals 2,150 Sales 114,650 Sales discounts 2,050 Sales returns and allowances 2,000 Cost of goods sold 38,000 Depreciation expense-Store equipment 0 Sales salaries expense 14,250 Office salaries expense 14,250 Insurance expense 0 Rent expense-Selling space 7,000 Rent expense-Office space Store supplies expense Advertising expense Totals 7,000 9,200 $ 179,750 $ 179,750 Additional Information: a. Store supplies still available at fiscal year-end amount to $1,800. b. Expired insurance, an administrative expense, is $1,800 for the fiscal year. c. Depreciation expense on store equipment, a selling expense, is $1,550 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,200 of inventory is still available at fiscal year-end