NELSON COMPANY Unadjusted Trial Balance January 31, 2017
	Debit			Credit
Cash	$	33,950
Merchandise inventory		14,500
Store supplies		5,500
Prepaid insurance		2,600
Store equipment		42,900
Accumulated depreciationStore equipment				$	17,400
Accounts payable					17,000
Common stock					3,000
Retained earnings					15,000
Dividends		2,250
Sales					141,350
Sales discounts		1,850
Sales returns and allowances		2,000
Cost of goods sold		38,000
Depreciation expenseStore equipment		0
Salaries expense		25,600
Insurance expense		0
Rent expense		15,000
Store supplies expense		0
Advertising expense		9,600
Totals	$	193,750		$	193,750

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:

1. Store supplies still available at fiscal year-end amount to $2,550.
2. Expired insurance, an administrative expense, for the fiscal year is $1,550.
3. Depreciation expense on store equipment, a selling expense, is $1,600 for the fiscal year.
4. 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.

Required:

1. Using the above information prepare adjusting journal entries: 2. Prepare a multiple-step income statement for fiscal year 2017. 3. Prepare a single-step income statement for fiscal year 2017.

No	Transaction	General Journal	Debit	Credit
1	a.	Store supplies expense	5,500
		Store supplies		5,500
2	b.	Insurance expense	1,550
		Prepaid insurance		1,550
3	c.	Depreciation expenseStore equipment	1,600
		Accumulated depreciationStore equipment		1,600
4	d.	Cost of goods sold	10,300
		Merchandise inventory		10,300

Prepare a multiple-step income statement for fiscal year 2017.

NELSON COMPANY
Income Statement
For Year Ended January 31, 2017
Sales		$141,350
Less: Sales discounts	$1,850
Less: Sales returns and allowances	2,000	3,850
Net sales		137,500
Cost of goods sold
Gross profit		137,500
Expense
Selling expenses
Depreciation expenseStore equipment	$1,600
Sales salaries expense
Rent expenseSelling space
Store supplies expense
Advertising expense	9,600
Total selling expenses	11,200
General and administrative expenses
Insurance expense	$1,550
Office salaries expense
Rent expenseOffice space
Total general and administrative expenses	1,550
Total expenses		12,750
Net income

Prepare a single-step income statement for fiscal year 2017.

NELSON COMPANY
Income Statement
For Year Ended January 31, 2017
Net sales
Expenses
Cost of goods sold
Selling expenses
General and administrative expenses
Total expenses		0
Net income