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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
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.
NELSON COMPANY | ||
---|---|---|
Unadjusted Trial Balance | ||
January 31 | ||
Debit | Credit | |
Cash | $ 22,050 | |
Merchandise inventory | 14,500 | |
Store supplies | 5,900 | |
Prepaid insurance | 2,800 | |
Store equipment | 42,700 | |
Accumulated depreciationStore equipment | $ 19,750 | |
Accounts payable | 16,000 | |
Common stock | 5,000 | |
Retained earnings | 31,000 | |
Dividends | 2,100 | |
Sales | 115,100 | |
Sales discounts | 1,900 | |
Sales returns and allowances | 2,200 | |
Cost of goods sold | 38,000 | |
Depreciation expenseStore equipment | 0 | |
Sales salaries expense | 15,500 | |
Office salaries expense | 15,500 | |
Insurance expense | 0 | |
Rent expenseSelling space | 7,000 | |
Rent expenseOffice space | 7,000 | |
Store supplies expense | 0 | |
Advertising expense | 9,700 | |
Totals | $ 186,850 | $ 186,850 |
Additional Information:
- Store supplies still available at fiscal year-end amount to $2,150.
- Expired insurance, an administrative expense, is $1,700 for the fiscal year.
- Depreciation expense on store equipment, a selling expense, is $1,600 for the fiscal year.
- To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,100 of inventory is still available at fiscal year-end.
Required
- Using the above information, prepare adjusting journal entries.
- Prepare a multiple-step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses.
- Prepare a single-step income statement for the year ended January 31.
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