he 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	$ 18,050
Merchandise inventory	14,000
Store supplies	5,700
Prepaid insurance	2,700
Store equipment	42,700
Accumulated depreciationStore equipment		$ 18,250
Accounts payable		13,000
J. Nelson, Capital		36,000
J. Nelson, Withdrawals	2,200
Sales		116,550
Sales discounts	1,850
Sales returns and allowances	2,200
Cost of goods sold	38,000
Depreciation expenseStore equipment	0
Sales salaries expense	14,700
Office salaries expense	14,700
Insurance expense	0
Rent expenseSelling space	8,500
Rent expenseOffice space	8,500
Store supplies expense	0
Advertising expense	10,000
Totals	$ 183,800	$ 183,800

Additional Information:

1. Store supplies still available at fiscal year-end amount to $2,050.
2. Expired insurance, an administrative expense, is $1,750 for the fiscal year.
3. Depreciation expense on store equipment, a selling expense, is $1,500 for the fiscal year.
4. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,700 of inventory is still available at fiscal year-end.

Required: 1. Using the above information, prepare adjusting journal entries. 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.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3

Using the above information, prepare adjusting journal entries.

Journal entry worksheet

• Store supplies still available at fiscal year-end amount to $2,050.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
a.	Store supplies expense	1,650
	Store supplies		1,650

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3

Using the above information, prepare adjusting journal entries.

Journal entry worksheet

• Store supplies still available at fiscal year-end amount to $2,050.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
a.	Store supplies expense	1,650
	Store supplies		1,650