Question

Frisco Company's Merchandise Inventory account at year-end has a balance of $62,115, but a physical count reveals that only $61,900 of inventory exists. The adjusting entry to record this $215 of inventory shrinkage is: Multiple Choice'

Answer 1

Answer:

Increase on cost of goods sold by $215, decrease in merchandize by $215.

Explanation:

With regards to the above information, the cost of goods sold will increase by $215, while the merchandize value would also decrease by $215.

Here, the books will be even out so that it would show there was a shrinkage at year end and beyond that which was purchased to have taken place.