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.