The following unadjusted trial balance is prepared at fiscalyear-end for Nelson Company.
NELSON COMPANY
Unadjusted Trial Balance
January 31, 2017 |
| Debit | | Credit |
| Cash | $ | 32,550 | | | |
| Merchandiseinventory | | 14,000 | | | |
| Storesupplies | | 5,600 | | | |
| Prepaidinsurance | | 2,300 | | | |
| Storeequipment | | 42,900 | | | |
| Accumulateddepreciation—Store equipment | | | | $ | 18,000 |
| Accountspayable | | | | | 17,000 |
| Commonstock | | | | | 3,200 |
| Retainedearnings | | | | | 16,000 |
| Dividends | | 2,050 | | | |
| Sales | | | | | 141,750 |
| Salesdiscounts | | 1,850 | | | |
| Sales returnsand allowances | | 2,200 | | | |
| Cost of goodssold | | 38,000 | | | |
| Depreciationexpense—Store equipment | | 0 | | | |
| Salariesexpense | | 29,000 | | | |
| Insuranceexpense | | 0 | | | |
| Rentexpense | | 16,000 | | | |
| Store suppliesexpense | | 0 | | | |
| Advertisingexpense | | 9,500 | | | |
| Totals | $ | 195,950 | | $ | 195,950 |
|
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$1,800.
- Expired insurance, an administrative expense, for the fiscalyear is $1,500.
- Depreciation expense on store equipment, a selling expense, is$1,600 for the fiscal year.
- To estimate shrinkage, a physical count of ending merchandiseinventory is taken. It shows $10,800 of inventory is stillavailable at fiscal year-end.
Required:
1. Using the above information prepareadjusting journal entries:
2. Prepare a multiple-step income statement forfiscal year 2017.
3. Prepare a single-step income statement forfiscal year 2017.
