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	$	20,100
Merchandise inventory		12,500
Store supplies		5,200
Prepaid insurance		2,400
Store equipment		42,600
Accumulated depreciationStore equipment				$	18,000
Accounts payable					14,000
Common stock					4,000
Retained earnings					27,000
Dividends		2,300
Sales					115,700
Sales discounts		1,900
Sales returns and allowances		2,200
Cost of goods sold		38,000
Depreciation expenseStore equipment		0
Sales salaries expense		14,000
Office salaries expense		14,000
Insurance expense		0
Rent expenseSelling space		7,000
Rent expenseOffice space		7,000
Store supplies expense		0
Advertising expense		9,500
Totals	$	178,700		$	178,700

Additional Information:

1. Store supplies still available at fiscal year-end amount to $2,700.
2. Expired insurance, an administrative expense, is $1,750 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 $10,600 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.)

Journal entry worksheet

• Store supplies still available at fiscal year-end amount to $2,700.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
a.

Prepare a multiple-step income statement for the year ended January 31.

NELSON COMPANY
Income Statement
For Year Ended January 31
		0
		0
		0
Expenses
Selling expenses
Total selling expenses		0
General and administrative expenses
Total general and administrative expenses		0
Total expenses		0

Prepare a single-step income statement for the year ended January 31.

NELSON COMPANY
Income Statement
For Year Ended January 31
Expenses
Total expenses		0