Question

Kylah Enterprises began the current month with inventory costing $10,000, then purchased inventory at a cost of $35,000. The perpetual inventory system indicates that inventory costing $30,000 was sold during the month for $40,000. If an inventory count shows that inventory costing $14,500 is actually on hand at month-end, what amount of shrinkage occurred during the month?

Answer 1

Answer:

Amount of shrinkage=$500.

Explanation:

Given Data:

Beginning Inventory Cost=$10,000

Purchased Inventory cost=$35,000

Inventory Sold=$30,000

On-hand Ending Inventory=$14,500

Required:

Amount of shrinkage=?

Solution:

Shrinkage is the difference between the total ending inventory balance and ending inventory on hand.

Total Ending inventory=Beginning Inventory+Purchased Inventory -Inventory Sold.

Total Ending inventory=$10,000+$35,000-$30,000

Total Ending inventory=$15,000

Amount of shrinkage=Total Ending inventory- On hand Ending Inventory

Amount of shrinkage=$15,000-$14,500

Amount of shrinkage=$500.