Problem 5-5A Preparing adjusting entries and income statements;computing gross margin, acid-test, and current ratios LO A1, A2,P3, P4
[The following information applies to the questionsdisplayed below.]
The following unadjusted trial balance is prepared at fiscalyear-end for Nelson Company.
NELSON COMPANY
Unadjusted Trial Balance
January 31, 2017 |
| Debit | | Credit |
| Cash | $ | 3,000 | | | |
| Merchandiseinventory | | 14,000 | | | |
| Storesupplies | | 5,700 | | | |
| Prepaidinsurance | | 2,300 | | | |
| Storeequipment | | 42,700 | | | |
| Accumulateddepreciation—Store equipment | | | | $ | 17,700 |
| Accountspayable | | | | | 12,000 |
| J. Nelson,Capital | | | | | 19,000 |
| J. Nelson,Withdrawals | | 2,250 | | | |
| Sales | | | | | 115,550 |
| Salesdiscounts | | 1,950 | | | |
| Sales returnsand allowances | | 2,150 | | | |
| Cost of goodssold | | 38,000 | | | |
| Depreciationexpense—Store equipment | | 0 | | | |
| Salariesexpense | | 26,900 | | | |
| Insuranceexpense | | 0 | | | |
| Rentexpense | | 16,000 | | | |
| Store suppliesexpense | | 0 | | | |
| Advertisingexpense | | 9,300 | | | |
| Totals | $ | 164,250 | | $ | 164,250 |
|
Rent expense and salaries expense are equally divided betweenselling activities and general and administrative activities.Nelson Company uses a perpetual inventory system.
Additional Information:
Store supplies still available at fiscal year-end amount to$2,750.
Expired insurance, an administrative expense, for the fiscalyear is $1,600.
Depreciation expense on store equipment, a selling expense, is$1,575 for the fiscal year.
To estimate shrinkage, a physical count of ending merchandiseinventory is taken. It shows $10,300 of inventory is stillavailable at fiscal year-end.
