[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, and Advertising Expense. It categorizes the remaining expenses as general and administrative.

Additional Information:

1. Store supplies still available at fiscal year-end amount to $2,500.
2. Expired insurance, an administrative expense, is $1,450 for the fiscal year.
3. Depreciation expense on store equipment, a selling expense, is $1,675 for the fiscal year.
4. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,700 of inventory is still available at fiscal year-end.

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.

4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31. (Round your answers to 2 decimal places.)

NELSON COMPANY Unadjusted Trial Balance January 31 Credit Debit $ 24, 200 12,500 5,500 2,700 42,800 $ 19,700 18,000 5,000 28,000 2,250 115,450 Cash Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciationStore equipment Accounts payable Common stock Retained earnings Dividends 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 2,000 2,000 38,000 0 13,600 13,600 0 9,000 9,000 0 9,000 $186,150 $186,150 Journal entry worksheet 2 3 4 Store supplies still available at fiscal year-end amount to $2,500. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal Journal entry worksheet