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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 Expense-Store Equipment, Sales Salaries Expense, Rent Expense-Selling Space, Store Supplies Expense, and Advertising Expense. It categorizes the remaining expenses as general and administrative. Cash Merchandise inventory Store supplies Prepaid insurance Store equipment Accounts payable Common stock NELSON COMPANY Unadjusted Trial Balance January 31 Debit Credit $ 16,500 13,500 5,900 2,500 42,800 Accumulated depreciation-Store equipment $ 17,200 13,000 5,000 Retained earnings 28,000 Dividends 2,150 Sales 116,550 Sales discounts 2,050 Sales returns and allowances 2,050 Cost of goods sold 38,000 Depreciation expense-Store equipment 0 Sales salaries expense 13,700 Office salaries expense 13,700 Insurance expense 0 Rent expense-Selling space 8,500 Rent expense-Office space 8,500 0 Store supplies expense Advertising expense Totals Additional Information: 9,900 $ 179,750 a. Store supplies still available at fiscal year-end amount to $2,650. b. Expired insurance, an administrative expense, is $1,400 for the fiscal year. $ 179,750 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 $10,200 of inventory is still available at fiscal year-end. Sales NELSON COMPANY Income Statement For Year Ended January 31 Less: Sales discounts Less: Sales returns and allowances Net sales Cost of goods sold Gross profit Expenses $ 116,550 $ 2,050 2,050 4,100 112,450 41,800 70,650 Selling expenses Advertising expense $ 9,900 Depreciation expense-Store equipment 1,625 Rent expense-Selling space 8,500 Sales salaries expense 13,700 Store supplies expense 2,650 Total selling expenses General and administrative expenses Insurance expense 1,400 Office salaries expense 13,700 Rent expense-Office space 8,500 Total general and administrative expenses Total expenses Net income 36,375 23,600 59,975
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