Explanation The above table represents the worksheet of Nelson under five headings namely, Unadjusted trial balance Adjustments Adjusted trial balance Income Statement Balance Sheet & Statement of Owner’s Equity The merchandising transactions are either debited or credited under each headings as in the table are explained below: 1. Cash: Cash represents cash in hand (Asset) that increases the cash balance of the company and it is debited with $1,000 as given in the unadjusted trial balance of the company. 2. Merchandise Inventory: Merchandise inventory is an asset that increases the inventories of the company and it is debited with $12,500 as given in the unadjusted trial balance of the company. The difference between the beginning inventory and inventory at the end i.e. ($12,500-$10,900=$1,600) is credited to the adjustments and the inventory available at the end of fiscal year is debited to the adjusted trial balance and balance sheet. 3. Store Supplies: Store supplies (Asset) represents supplies in hand with the company that represents increase in supplies and it is debited with $5,800 as given in the unadjusted trial balance. Store Supplies at the end of fiscal year is $1,750 as per the adjusting entries data and so it is debited in adjusted trial balance and credited with $4,050 ($5,800-$1,750) in adjustments for adjusting entries. Store supplies at the end of fiscal year in recorded in the balance sheet. 4. Prepaid Insurance: Prepaid insurance represents asset of the company as the expenses are paid in advance and hence it is debited with $2,400 and expired insurance of $1,400 is credited to the adjustments and the difference between unadjusted trial balance amount and adjusted entry ($2,400-$1,400) i.e. $1,000 is debited to the adjusted trial balance. 5. Store Equipment: Store equipment is an asset to the company and hence it is debited with $42,900 as given in the unadjusted trial balance. 6. Accumulated Depreciation (Store Equipment): Accumulated depreciation is the depreciation expense for store equipment that was put to use and that reduces the value of total equipment and hence it is credited with $15,250 in unadjusted trial balance. Depreciation expense of $1,525for the fiscal year is credited in adjustments heading and the total depreciation expense of $16,775 ($15,250+$1,525) is credited in the adjusted trial balance and credited with $16,775 in the balance sheet. 7. Accounts Payable: Accounts payable account is credited when goods are purchased on credit terms and payment is to be made at a future date to the supplier. Hence the accounts payable is credited with $10,000. 8. Nelson Capital: Nelson’s Capital is credited with $32,000 because capital is considered to be liability for the company under Business Entity Concept that treats the business as a separate entity from the owner of the business...

Loose Leaf for Fundamentals of Accounting Principles and Connect Access Card

22nd Edition

ISBN: 9781259542169

Author: John J Wild

Publisher: McGraw-Hill Education

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 5, Problem 6APSA

To determine

Introduction:

Merchandising Transactions:

The transactions that deals with inventory that includes the purchase and sale of inventory refers to merchandising transactions

Under perpetual inventory system, all the purchases of inventory is debited to the inventory account and inventory sales are credited to the inventory account that reflects the current inventory cost on hand.

To prepare:

The 10 column worksheet for Nelson Company with necessary adjustments to determine its net income for the year ended January 31^s^t, 2015.

Expert Solution & Answer

Chapter 5 Solutions

Loose Leaf for Fundamentals of Accounting Principles and Connect Access Card

Ch. 5 - Prob. 1DQ Ch. 5 - 2. In comparing the accounts of a merchandising...Ch. 5 - Prob. 3DQ Ch. 5 - Prob. 4DQ Ch. 5 - Prob. 5DQ Ch. 5 - Prob. 6DQ Ch. 5 - Prob. 7DQ Ch. 5 - Prob. 8DQ Ch. 5 - Prob. 9DQ Ch. 5 - Prob. 10DQ

Ch. 5 - Prob. 11DQ Ch. 5 - Prob. 12DQ Ch. 5 - Prob. 13DQ Ch. 5 - Prob. 14DQ Ch. 5 - Prob. 15DQ Ch. 5 - Prob. 1QS Ch. 5 - Prob. 2QS Ch. 5 - Prob. 3QS Ch. 5 - Prob. 4QS Ch. 5 - Prob. 5QS Ch. 5 - Prob. 6QS Ch. 5 - Prob. 7QS Ch. 5 - Prob. 8QS Ch. 5 - Prob. 9QS Ch. 5 - Prob. 10QS Ch. 5 - Prob. 11QS Ch. 5 - Prob. 12QS Ch. 5 - Prob. 13QS Ch. 5 - Prob. 14QS Ch. 5 - Prob. 15QS Ch. 5 - Prob. 16QS Ch. 5 - Prob. 17QS Ch. 5 - Prob. 18QS Ch. 5 - Prob. 1E Ch. 5 - Prob. 2E Ch. 5 - Prob. 3E Ch. 5 - Prob. 4E Ch. 5 - Prob. 5E Ch. 5 - Exercise 5-6 Recording purchase returns and...Ch. 5 - Prob. 7E Ch. 5 - Prob. 8E Ch. 5 - Prob. 9E Ch. 5 - Prob. 10E Ch. 5 - Prob. 11E Ch. 5 - Prob. 12E Ch. 5 - Prob. 13E Ch. 5 - Prob. 14E Ch. 5 - Prob. 15E Ch. 5 - Prob. 16E Ch. 5 - Exercise 5-17A Recording purchases and...Ch. 5 - Prob. 18E Ch. 5 - Prob. 19E Ch. 5 - Prob. 20E Ch. 5 - Prepare journal entries to record the following...Ch. 5 - ( Problem 5-2A Preparing journal entries for...Ch. 5 - Prob. 3APSA Ch. 5 - Prob. 4APSA Ch. 5 - Prob. 5APSA Ch. 5 - Prob. 6APSA Ch. 5 - Prob. 1BPSB Ch. 5 - Prepare journal entries to record the following...Ch. 5 - Prob. 3BPSB Ch. 5 - Prob. 4BPSB Ch. 5 - Prob. 5BPSB Ch. 5 - Problem 5-6BE Refer to the data and information in...Ch. 5 - Prob. 5SP Ch. 5 - Prob. 1GLP Ch. 5 - Prepare journal entries to record the following...Ch. 5 - Based on Problem 5-5A Problem 5-5A Preparing...Ch. 5 - Prob. 1BTN Ch. 5 - Prob. 2BTN Ch. 5 - Prob. 3BTN Ch. 5 - Prob. 4BTN Ch. 5 - Prob. 5BTN Ch. 5 - Prob. 6BTN Ch. 5 - Prob. 7BTN Ch. 5 - Prob. 8BTN Ch. 5 - Prob. 9BTN

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Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY

Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License