### Inventory Shrinkage Journal Entry Example**Scenario:** A company employs a periodic inventory system. During the December 31 year-end physical inventory count, it was discovered that a $300 shrinkage in inventory has occurred.**Note:** Enter debits before credits.**Journal Entry Table**| Date | General Journal | Debit | Credit ||-------|---------------------------|-------|--------|| 12/31 | | | || | | | || | | | || | | | || | | | |This table provides space for recording the necessary journal entries to account for the discovered inventory shrinkage. The date is pre-filled with "12/31" indicating the end of the year when the shrinkage was identified. The "General Journal" column is where the account names will be recorded, while the "Debit" and "Credit" columns are for recording the respective amounts. ### Explanation:To address the $300 inventory shrinkage, the typical journal entry would involve:- **Debit:** Cost of Goods Sold (COGS) by $300, to reflect the increased costs associated with shrinkage.- **Credit:** Inventory by $300, to reduce the inventory balance, aligning with the physical count. This adjustment ensures financial statements accurately reflect the company's inventory position.

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Description: ### Inventory Shrinkage Journal Entry Example**Scenario:** A company employs a periodic inventory system. During the December 31 year-end physical inventory count, it was discovered that a $300 shrinkage in inventory has occurred.**Note:** Enter de

Journal entry to record the shrinkage in inventory is an adjusting entry. After passing this entry,…

Business

Accounting

A company uses a periodic inventory system and during the December 31, year-end physical inventory count discovered that they have incurred a $300 shrinkage in inventory. Note: Enter debits before credits. Date 12/31 General Journal Debit Credit

A company uses a periodic inventory system and during the December 31, year-end physical inventory count discovered that they have incurred a $300 shrinkage in inventory. Note: Enter debits before credits. Date 12/31 General Journal Debit Credit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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