Problem 4-5A Preparing adjusting entries and income statements; computing gross margin, acid- test, and current ratios LO A1, A2, 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 Unadjusted Trial Balance January 31, 2017 Credit Debit $ 30,600 14,500 5,100 2,700 42,700 $ 19,550 13,000 3,200 16,000 2,100 139, 700 Cash Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation-store equipment Accounts payable Common stock Retained earnings Dividends Sales Sales discounts Sales returns and allowances Cost of goods sold Depreciation expense-Store equipment Salaries expense Insurance expense Rent expense Store supplies expense Advertising expense Totals 1,900 2,150 38,000 26,400 16,000 9.300 $191,450 $191, 450 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: a. Store supplies still available at fiscal year-end amount to $2,150. b. Expired insurance, an administrative expense, for the fiscal year is $1,450. c. Depreciation expense on store equipment, a selling expense, is $1,650 for the fiscal year. d. 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. Problem 4-5A Part 1, 2 and 3 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