[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 $ 20,050
Merchandise inventory 13,500
Store supplies 5,700
Prepaid insurance 2,800
Store equipment 42,700
Accumulated depreciation—Store equipment $ 18,050
Accounts payable 17,000
Common stock 3,000
Retained earnings 29,000
Dividends 2,250
Sales 114,700
Sales discounts 1,850
Sales returns and allowances 2,200
Cost of goods sold 38,000
Depreciation expense—Store equipment 0
Sales salaries expense 12,900
Office salaries expense 12,900
Insurance expense 0
Rent expense—Selling space 8,500
Rent expense—Office space 8,500
Store supplies expense 0
Advertising expense 9,900
Totals $ 181,750 $ 181,750

Additional Information:

Store supplies still available at fiscal year-end amount to $2,200.
Expired insurance, an administrative expense, is $1,700 for the fiscal year.
Depreciation expense on store equipment, a selling expense, is $1,625 for the fiscal year.
To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,700 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.
3. Prepare a single-step income statement for the year ended January 31.