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 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 Cash Merchandise inventory Store supplies Prepaid insurance Store equipment Accounts payable Common stock Retained earnings Dividends Sales Sales discounts Debit $18,800 Credit 13,000 5,100 2,700 42,600 Accumulated depreciation-Store equipment $ 16,450 12,000 6,000 29,000 2,300 115,650 1,900 Sales returns and allowances. Cost of goods sold 2,100 38,000 Depreciation expense-Store equipment ok ences Sales Sales discounts 115,650 1,900 Sales returns and allowances Cost of goods sold Depreciation expense-Store equipment Sales salaries expense Office salaries expense Insurance expense Rent expense-Selling space Rent expense-Office space Store supplies expense Advertising expense Totals 2,100 38,000 0 14, 650 14,650 0 7,000 7,000 0 9,300 $179,100 $179,100 Additional Information: a. Store supplies still available at fiscal year-end amount to $1,750. b. Expired insurance, an administrative expense, is $1,500 for the fiscal year. c. Depreciation expense on store equipment, a selling expense, is $1,675 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,800 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. 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. View transaction list View journal entry worksheet