Required information 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 Debit $ 14,300 12,500 5,300 2,600 42,900 $ 19,500 16,000 18,000 2,150- 116,500 Cash Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation-store equipment Accounts payable 3. Nelson, Capital J. 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 1,950 2,200 38,000 12,950 12,950 6,500 6,500 9,209 $170,000 $170,000 References 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. ook 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31. (Round your answers to 2 decimal places.) rences 1 Current ratio Acid-test ratio Gross margin ratio 1 1 Required information 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 Debit $ 14,300 12,500 5,300 2,600 42,900 $ 19,500 16,000 18,000 2,150- 116,500 Cash Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation-store equipment Accounts payable 3. Nelson, Capital J. 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 1,950 2,200 38,000 12,950 12,950 6,500 6,500 9,209 $170,000 $170,000 References 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. ook 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31. (Round your answers to 2 decimal places.) rences 1 Current ratio Acid-test ratio Gross margin ratio 1 1