Perpetual Inventory System : In perpetual inventory system, every recent transaction has to be updated such as when an item has been bought or sold, the system needs to be updated. Inventory Shrinkage : Inventory shrinkage refers to the amount of excessive inventory that have been by mistakenly added to the account but which is no longer present in the actual inventory. Physical count is conducted to check the actual inventory left. To Prepare: The journal entry for inventory shrinkage.

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Chapter 4, Problem 9QS

To determine

Perpetual Inventory System: In perpetual inventory system, every recent transaction has to be updated such as when an item has been bought or sold, the system needs to be updated.

Inventory Shrinkage: Inventory shrinkage refers to the amount of excessive inventory that have been by mistakenly added to the account but which is no longer present in the actual inventory. Physical count is conducted to check the actual inventory left.

To Prepare: The journal entry for inventory shrinkage.

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