Required information [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 Unadjusted Trial Balance January 31, 2018 Credit Debit $ 10,900 14,000 5,300 2,300 42,600 $ 19,150 18,000 3,400 17,000 2,050 Cash Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation-Store equipment Accounts payable Common stock Retained earnings Dividends Sales Sales discounts Sales returns and allowances Cost of goods sold Depreciation expense-Store equipment Salaries expense Insurance expense Rent expense Store supplies expense Advertising expense Totals 115,950 1,800 2,250 38,000 0 32,000 0 13,000 0 9,300 $173,500 $173,500 Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Nelson Company uses a perpetual inventory system. Additional Information: a. Store supplies still available at fiscal year-end amount to $1,750. b. Expired insurance, an administrative expense, for the fiscal year is $1,400. c. Depreciation expense on store equipment, a selling expense, is $1,625 for the fiscal year. d. 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. NELSON COMPANY Income Statement For Year Ended January 31, 2018 Sales $ 115,950 Less: Sales discounts $ 1,800 2,250 Less: Sales returns and allowances Net sales 4,050 111,900 41,400 70,500 Cost of goods sold Gross profit Expenses Selling expenses Depreciation expense-Store equipment Sales salaries expense Rent expense-Selling space Store supplies expense Advertising expense $ 1,625 17,500 X 7,500 X 3,550 9,300 39,475 Total selling expenses General and administrative expenses $ 1,400 Insurance expense Office salaries expense 17,500 X Rent expense-Office space 7,500 26,400 Total general and administrative expenses Total expenses Net income 65,875 35,375 X $ NELSON COMPANY Income Statement For Year Ended January 31, 2018 Expenses Total expenses 0