Problem 5-5A Preparing adjusting entries and income statements; computing gross margin, acid-test, and current ratios LO A1, A2, P3, P4 Skip to question [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 expensestore equipment, sales salaries expense, rent expenseselling space, store supplies expense, advertising expense. It categorizes the remaining expenses as general and administrative. NELSON COMPANY Unadjusted Trial Balance January 31 Debit Credit Cash $ 4,050 Merchandise inventory 12,000 Store supplies 6,000 Prepaid insurance 2,400 Store equipment 42,900 Accumulated depreciationStore equipment $ 18,150 Accounts payable 16,000 J. Nelson, Capital 18,000 J. Nelson, Withdrawals 2,250 Sales 116,150 Sales discounts 1,900 Sales returns and allowances 2,000 Cost of goods sold 38,000 Depreciation expenseStore equipment 0 Sales salaries expense 15,700 Office salaries expense 15,700 Insurance expense 0 Rent expenseSelling space 8,000 Rent expenseOffice space 8,000 Store supplies expense 0 Advertising expense 9,400 Totals $ 168,300 $ 168,300 Additional Information: Store supplies still available at fiscal year-end amount to $2,400. Expired insurance, an administrative expense, for the fiscal year is $1,600. Depreciation expense on store equipment, a selling expense, is $1,700 for the fiscal year. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,600 of inventory is still available at fiscal year-end. Problem 5-5A Part 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. 3. Prepare a single-step income statement for the year ended January 31.