Problem 5-5A 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, advertising expense. It categorizes the remaining expenses as general and administrative. NELSON COMPANY Unadjusted Trial Balance January 31 Credit Cash Debit $ 7,550 14,000 5,500 2,400 42,900 $ 17,500 17,000 19,000 2,250 114,700 Merchandise Inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation-store equipment Accounts payable 3. 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 1,850 2,150 38,000 e 14,150 14,150 7,000 7,000 9.300 $168.200 $168.200 Rent expense-Selling space Rent expense-office space Store supplies expense Advertising expense Totals 7,000 7,080 9,30 $168,280 $168,200 Additional Information: a. Store supplies still available at fiscal year-end amount to $2,700. b. Expired insurance, an administrative expense, for the fiscal year is $1.450. c. Depreciation expense on store equipment, a selling expense, is $1650 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken it shows $10.900 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