The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company. NELSON COMPANY
Unadjusted Trial Balance
January 31, 2013
Debit Credit
Cash $27,500
Merchandise inventory 13,500
Store supplies 5,800
Prepaid insurance 2,100
Store equipment 42,900
Accumulated depreciation Store equipment $ 16,050
Accounts payable 13,000
J. Nelson, Capital 39,000
J. Nelson, Withdrawals 2,300
Sales 116,100
Sales discounts 2,000
Sales returns and allowances 2,150
Cost of goods sold 38,000
Depreciation expense Store equipment 0
Salaries expense 25,700
Insurance expense 0
Rent expense 13,000
Store supplies expense 0
Advertising expense 9,200
Totals $184,150 184,150
Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. Nelson Company uses a perpetual inventory system.
a. Store supplies still available at fiscal year-end amount to $2,650.
b. Expired insurance, an administrative expense, for the fiscal year is $1,450.
c. Depreciation expense on store equipment, a selling expense, is $1,600 for the fiscal year.
d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,100 of inventory is still available at fiscal year-end.
1. Using the above information prepare adjusting journal entries:
2. Prepare a multiple-step income statement for fiscal year 2013.