Question

Zenith Company's Merchandise Inventory account at year-end has a balance of $91,820, but a physical count reveals that only $90,450 of inventory exists. The adjusting entry to record this $1,370 of inventory shrinkage is: Multiple Choice

Answer 1

Cost of goods sold $1,370

Merchandise Inventory $1,370

Step-by-step explanation:

The cost of goods sold will be debited and merchandise inventory will be credited for the amount of $1,370 ($91,820 - $90,450). Shrinkage expenses is included in the cost of goods sold account.

Journal entry

Journal Entry Debit Credit

Cost of goods sold $1,370

Merchandise Inventory $1,370

All the best...