90.2K

Verified Solution

Link Copied!

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 questions displayed below.) 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, advertising expense. It categorizes the remaining expenses as general and administrative. NELSON COMPANY Unadjusted Trial Balance January 31 Credit Debit $ 7,550 14,000 5,500 2,400 42,900 $ 17,500 17,000 19,000 2,250 114,700 Cash Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation-Store equipment Accounts payable 3. Nelson, Capital 3. Nelson, withdrawals Sales Sales discounts Sales returns and allowances Cost of goods sold Depreciation expense-Store equipment Sales salaries expense Office salaries expense Insurance expense Rent expense-selling space Rent expense-office space Store supplies expense Advertising expense Totals 1,850 2,150 38,000 3 14,150 14,150 8 7,000 7,000 9,300 $168.200 $168.209 $ 7,550 14,000 5,500 2,400 42,989 $ 17,500 17,000 19,000 2,250 Cash Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation-Store equipment Accounts payable 3. Nelson, Capital 3. Nelson, Withdrawals Sales Sales discounts Sales returns and allowances Cost of goods sold Depreciation expense-Store equipment Sales salaries expense Office salaries expense Insurance expense Rent expense-selling space Rent expense-Office space Store supplies expense Advertising expense Totals 114,780 1,850 2,150 38,800 14,150 14,150 7,000 7,000 9,300 $168, 200 $168,200 Additional Information: a. Store supplies still available at fiscal year-end amount to $2,700. b. Expired insurance, an administrative expense, for the fiscal year is $1,450. c. Depreciation expense on store equipment, a selling expense, is $1.650 for the fiscal year d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10.900 of inventory is stil available at fiscal year-end

Answer & Explanation Solved by verified expert

See Answer