Question

the beginning inventory of eastern wholesalers was $130,000, and the ending inventory is $110,619. what entries are needed at the end of the fiscal period to adjust merchandise inventory?

Answer 1

To adjust the merchandise inventory, a journal entry is needed to decrease the Merchandise Inventory account by $19,381 and increase the Cost of Goods Sold account by the same amount, reflecting the reduction in inventory over the fiscal period.

Step-by-step explanation:

To adjust the merchandise inventory at the end of the fiscal period from a beginning inventory of $130,000 to an ending inventory of $110,619, we need to record an adjusting entry involving the Merchandise Inventory and Cost of Goods Sold accounts.

The entry would decrease the Merchandise Inventory and increase the Cost of Goods Sold to reflect the merchandise used, sold, or lost. This is calculated by subtracting the ending inventory from the beginning inventory. In this case, the adjustment would be for $19,381 (130,000 - 110,619).

The journal entry would be:

• Debit Cost of Goods Sold: $19,381
• Credit Merchandise Inventory: $19,381

This entry reflects the consumption of inventory over the period and aligns the company's records with the physical inventory count.