Question

Your business has two branch stores. The recent physical inventory reports that the merchandise value for each store is: Store A $454,385, and Store B $586,855. The merchandise book value for each store is: Store A $495,275, and Store B $615,225. What is the dollar amount of shrinkage for each store?

Answer 1

Answer: Shrinkage for Store A ($40,890), Store B ($28,370)

Given:

Merchandise Value of Stores A and B

A1 $454,385, and  B1 $586,855

Book Value of Stores

A2 $495,275, and  B2 $615,225

Shrinkage refers to the loss of inventory from whatever source.   

Shrinkage for each store is computed as:

Book Value – Merchandise Value

Shrinkage for Store A

A2-A1

495,275-454,385

$40,890

 

Shrinkage for Store B

B2-B1

615,225-586,855

$28,370