Problem 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 Salarles 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 Credit Debit $ 19,380 12,000 5,400 2,480 42,689 $ 18,180 12,080 30, eee 2,200 116,050 Cash Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation-store equipment Accounts payable J. Nelson, Capital 3. Nelson, Withdrawals Sales Sales discounts 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 2,050 2,8 38,899 12,750 12,750 @ 7,500 7,500 9,789 $ 176,150 $ 176,150 Additional Information: a. Store supplies still available at fiscal year-end amount to $1.750. b. Expired Insurance, an administrative expense, is $1,700 for the fiscal year. c. Depreciation expense on store equipment, a selling expense, is $1,600 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise Inventory is taken. It shows $11,000 of Inventory is still available at fiscal year-end. Problem 5-5A (Algo) Parts 1, 2 and 3 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