Question

[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. NELSON COMPANY Unadjusted Trial Balance January 31 Debit Credit Cash $ 21,050 Merchandise inventory 14,000 Store supplies 5,900 Prepaid insurance 2,800 Store equipment 42,700 Accumulated depreciation-Store equipment $ 19,950 Accounts payable 12,000 Common stock 6,000 Retained earnings 29,000 Dividends 2,250 Sales 114,900 Sales discounts 2,100 Sales returns and allowances 2,150 Cost of goods sold 38,000 Depreciation expense-Store equipment © Sales salaries expense 12,750 Office salaries expense 12,750 @ Insurance expense Rent expense-Selling space 8,000 Rent expense-office space 8,000 Store supplies expense Advertising expense 9,400 Totals $181,850 $181,850 @ Additional Information: a. Store supplies still available at fiscal year-end amount to $2,500. b. Expired insurance, an administrative expense, is $1,700 for the fiscal year. c. Depreciation expense on store equipment, a selling expense, is $1,650 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,600 of inventory is still available at fiscal year-end.

Answer 1

here solution requires prepration of final accounts are as follows

Income statement gules 112757 opening stock 14000 stock 10 boo 41400 52 001 71352 114900 leess: setora 2150 keys!- loete goods hold 38000 , Addi lese! closing stock Gross profit less operating expenses. "store supplied leys!- clasing Bal Sales Discount office ralasy sales salary 5900 2500 Aividends. Depriciation insurance expired Rent expenses - selling rent expenses - office Advertisement Expenses total Net profit (Gross profit - opesat 9358 3400 1253. 2140, 12752. 12758. 1652 1700 8000 8000 9400 6 2000 sopuse) CS Scanned with CamScanner

Balance sheet Amt Erabilitis & capital Commen stock Retaimed & corming Amt 6000 2900e 9358. Net profit owners Equity 44350 Alpriciation Add Current Repriciatiam 19958, 1657 21600 current liability 12000 Accounts payable. 77953 77.950. 42700. total Assets fixed Assets stores Equipment 1 current Arreth Cash. prepard Insurance less! repired store closing Balance closing inventory to tal. 2loso. 2800 1700 11 00, 2500 10600 84050. 35950. 77950. CS Scanned with CamScanner

current rabio current assets Current babilites => 35253_12000 = 2.9375 Acid test ratio liquid Assets current liabilitis => 21050 = 15754166. 12000 Grosols margin rabio Gross profit & Sales x 100 = 71350-112750X100 = 63.287, CS Scanned with CamScanner
here noted that only one liquid asset i.e., cash its taken for calculation of absolute liqied ratio.

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