Question

When the physical count of Rosanna Company inventory had a cost of $4,350 at year end and the unadjusted balance in Inventory was $4,500, Rosanna will have to make the following entry:

a.Cost of Goods Sold150 Inventory150
b.Inventory150 Cost of Goods Sold150
c.Income Summary150 Inventory150
d.Cost of Goods Sold4,500 Inventory4,500

Answer 1

The correct answer is option (a).

Step-by-step explanation:

According to the scenario, the given data are as follows:

Ending inventory = $4,350

Unadjusted inventory = $4,500

So, we can calculate the cost of goods sold by using following formula:

Cost of goods sold = Unadjusted inventory - Ending inventory

By putting the value in the formula, we get

Cost of goods sold = $4,500 - $4,350 = $150

As the cost of goods sold is in positive so it will be debited.

So, the adjusting entry are as follows:

Cost of goods sold A/c Dr $150

To Inventory $150

(Being cost of goods sold is recorded)