Answer:
Date Accounts titles Debit Credit
A)
Dec. 31 Sales returns and allowances $125,000
Accounts receivable $125,000
Merchandise Inventory $80,000
Cost of Good sold $80,000
B)
Dec. 31 Cost of Good sold $23,250
Merchandise Inventory $23,250
Note: Inventory Shrinkage = Account balance of inventory - Physical inventory on hand
= $1,333,150 - $1,309,900
= $23,250