Required information [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, and Advertising Expense. It categorizes the remaining expenses as general and administrative. Cash Merchandise inventory Store supplies Prepaid insurance Store equipment NELSON COMPANY Unadjusted Trial Balance January 31 Accumulated depreciation-Store equipment Accounts payable Common stock Retained earnings Dividends 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 Debit $ 1,000 12,500 5,800 2,400 42,900 2,200 2,000 2,200 38,400 0 17,500 17,500 Credit $ 15,250 10,000 5,000 27,000 111,950 0 7,500 7,500 0 9,800 $ 169,200 $ 169,200 Additional Information: a. Store supplies still available at fiscal year-end amount to $1,750. b. Expired insurance, an administrative expensé, is $1,400 for the fiscal year. c. Depreciation expense on store equipment, a selling expense, is $1,525 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,900 of inventory is still available at fiscal year-end. Required: 1. Using the above information, prepare adjusting journal entries. 2. Prepare a multiple-step income statement for the year ended January 31 that begins with gross sales and includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses. 3. Prepare a single-step income statement for the year ended January 31.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
![Required information
[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, and Advertising Expense. It
categorizes the remaining expenses as general and administrative.
Cash
Merchandise inventory
Store supplies
Prepaid insurance
Store equipment
NELSON COMPANY
Unadjusted Trial Balance
January 31
Accumulated depreciation-Store equipment
Accounts payable
Common stock
Retained earnings
Dividends
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
Debit
$1,000
12,500
5,800
2,400
42,900
2,200
2,000
2,200
38,400
0
17,500
17,500
0
7,500
7,500
0
9,800
$ 169,200
Credit
$ 15,250
10,000
5,000
27,000
111,950
$ 169,200
Additional Information:
a. Store supplies still available at fiscal year-end amount to $1,750.
b. Expired insurance, an administrative expensé, is $1,400 for the fiscal year.
c. Depreciation expense on store equipment, a selling expense, is $1,525 for the fiscal year.
d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,900 of inventory is still
available at fiscal year-end.
Required:
1. Using the above information, prepare adjusting journal entries.
2. Prepare a multiple-step income statement for the year ended January 31 that begins with gross sales and includes separate
categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses.
3. Prepare a single-step income statement for the year ended January 31.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6bfe29d4-782f-428b-937b-485b5d1c1aec%2Ff3744caa-1741-48cb-b257-873b13f30c1e%2Fkk5rfck_processed.jpeg&w=3840&q=75)
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