Required information [The following information applies to the questions display

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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 Unadjusted Trial Balance January 31, 2017 Debit Credit Cash Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation-Store equipment Accounts payable 0. Nelson, Capital . Nelson, Withdrawals Sales Salesdiscounts Sales returns and allowances Cost of goods sold Depreciation expense-Store equipment Salaries expense Insurance expense Rent expense Store supplies expense Advertising expense Totals $ 4,750 15,000 5,900 2,500 42,800 $ 17,700 16,000 19,000 2,250 114,650 1,950 2,000 38,000 29,000 14,000 9,200 $167,350 $167,350 Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Nelson Company uses a perpetual inventory system Additional Information: a. Store supplies still available at fiscal year-end amount to $2,150 b. Expired insurance, an administrative expense, for the fiscal year is $1,700 c. Depreciation expense on store equipment, a selling expense, is $1,550 for the fiscal year d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,200 of inventory is still available at fiscal year-end

Explanation / Answer

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NELSON COMPANY Income Statement For Year Ended January 31, 2017 Sales 114650 Less: Sales discounts 1950 Less: Sales returns and allowances 2000 3950 Net sales 110700 Cost of goods sold [$38000 + ($15000 - $10200)] 42800 Gross profit 67900 Expense Selling expenses Depreciation expense-store equipment 1550 Store supplies expense ($5900 - $2150) 3750 Advertising expense 9200 Salaries expense 14500 Rent expense 7000 Total selling expenses 36000 General and administrative expenses Salaries expense 14500 Insurance expense 1700 Rent expense 7000 Total general and administrative expenses 23200 Total expenses 59200 Net income 8700

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