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tries The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company Nelson Com- pany uses a perpetual inventory system. It categorizes the

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tries The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company Nelson Com- pany uses a perpetual inventory system. It categorizes the following accounts as selling expenses. Depre- ciation 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. in, atios NELSON COMPANY Unadjusted Trial Balance January 31 Debit Credit Cash $ 1.000 Merchandise inventory 12,500 Store supplies 5.800 Prepaid insurance 2.400 Store equipment 42.900 Accumulated depreciation --Store equipment $ 15.250 Accounts payable 10,000 Common stock 5,000 Retained earnings 27,000 Dividends 2.200 Sales 111,950 Sales discounts 2,000 Sales returns and allowances 2,200 Cost of goods sold 38,400 Depreciation expense-Store equipment 0 Sales salaries expense 17,500 Office salaries expense 17,500 Insurance expense 0 Rent expense-Selling space 7,500 Rent expense-Office space 7,500 Store supplies expense 0 Advertising expense 9.800 Totals $169,200 $169,200 Required 1. Prepare adjusting journal entries to reflect each of the following: a. Store supplies still available at fiscal year-end amount to $1,750. b. Expired insurance, an administrative expense, is $1,400 for the fiscal year. c. Depreciation expense on store equipment, a selling expense, is $1,525 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,900 of inventory is still available at fiscal year-end. 2. Prepare a multiple-step income statement for the year ended January 31 that begins with gross sales and includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses. 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 ratios to two decimals.)

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