Inventory Shrinkage: It represents the loss of inventory. In other words, it refers to the difference between the amount of inventory shown in the accounting records and the actual inventory. The difference indicates the issues with the inventory caused due to lost, theft, clerical errors, damaged goods or spoilage. In this case Company T is pressuring the accounting department to increase the earnings. Ms. M is an accountant in Company T. Ms. M’s boss already informed her that if the earnings will not increase then he will be terminated. After the end of the fiscal year Ms. M compares the physical count to the balance in the inventory account, and finds a huge amount of inventory shrinkage. This amount is so huge that the earnings will drop significantly. Ms. M’s boss requests her to not to make any adjusting entry for the inventory shrinkage. To Explain: The action of Ms. M for the above situation and its reason.

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Answer 1

Question

Chapter 5, Problem 5.1TIF

To determine

Inventory Shrinkage: It represents the loss of inventory. In other words, it refers to the difference between the amount of inventory shown in the accounting records and the actual inventory. The difference indicates the issues with the inventory caused due to lost, theft, clerical errors, damaged goods or spoilage.

In this case Company T is pressuring the accounting department to increase the earnings. Ms. M is an accountant in Company T. Ms. M’s boss already informed her that if the earnings will not increase then he will be terminated.

After the end of the fiscal year Ms. M compares the physical count to the balance in the inventory account, and finds a huge amount of inventory shrinkage. This amount is so huge that the earnings will drop significantly. Ms. M’s boss requests her to not to make any adjusting entry for the inventory shrinkage.

To Explain: The action of Ms. M for the above situation and its reason.

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Answer 2

Question

Chapter 5, Problem 5.1TIF

To determine

Inventory Shrinkage: It represents the loss of inventory. In other words, it refers to the difference between the amount of inventory shown in the accounting records and the actual inventory. The difference indicates the issues with the inventory caused due to lost, theft, clerical errors, damaged goods or spoilage.

In this case Company T is pressuring the accounting department to increase the earnings. Ms. M is an accountant in Company T. Ms. M’s boss already informed her that if the earnings will not increase then he will be terminated.

After the end of the fiscal year Ms. M compares the physical count to the balance in the inventory account, and finds a huge amount of inventory shrinkage. This amount is so huge that the earnings will drop significantly. Ms. M’s boss requests her to not to make any adjusting entry for the inventory shrinkage.

To Explain: The action of Ms. M for the above situation and its reason.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 5, Problem 5.1TIF

To determine

Inventory Shrinkage: It represents the loss of inventory. In other words, it refers to the difference between the amount of inventory shown in the accounting records and the actual inventory. The difference indicates the issues with the inventory caused due to lost, theft, clerical errors, damaged goods or spoilage.

In this case Company T is pressuring the accounting department to increase the earnings. Ms. M is an accountant in Company T. Ms. M’s boss already informed her that if the earnings will not increase then he will be terminated.

After the end of the fiscal year Ms. M compares the physical count to the balance in the inventory account, and finds a huge amount of inventory shrinkage. This amount is so huge that the earnings will drop significantly. Ms. M’s boss requests her to not to make any adjusting entry for the inventory shrinkage.

To Explain: The action of Ms. M for the above situation and its reason.

Expert Solution & Answer

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Answer 4

Question

Chapter 5, Problem 5.1TIF

To determine

Inventory Shrinkage: It represents the loss of inventory. In other words, it refers to the difference between the amount of inventory shown in the accounting records and the actual inventory. The difference indicates the issues with the inventory caused due to lost, theft, clerical errors, damaged goods or spoilage.

In this case Company T is pressuring the accounting department to increase the earnings. Ms. M is an accountant in Company T. Ms. M’s boss already informed her that if the earnings will not increase then he will be terminated.

After the end of the fiscal year Ms. M compares the physical count to the balance in the inventory account, and finds a huge amount of inventory shrinkage. This amount is so huge that the earnings will drop significantly. Ms. M’s boss requests her to not to make any adjusting entry for the inventory shrinkage.

To Explain: The action of Ms. M for the above situation and its reason.

Expert Solution & Answer

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Answer 5

Chapter 5, Problem 5.1TIF

To determine

Inventory Shrinkage: It represents the loss of inventory. In other words, it refers to the difference between the amount of inventory shown in the accounting records and the actual inventory. The difference indicates the issues with the inventory caused due to lost, theft, clerical errors, damaged goods or spoilage.

In this case Company T is pressuring the accounting department to increase the earnings. Ms. M is an accountant in Company T. Ms. M’s boss already informed her that if the earnings will not increase then he will be terminated.

After the end of the fiscal year Ms. M compares the physical count to the balance in the inventory account, and finds a huge amount of inventory shrinkage. This amount is so huge that the earnings will drop significantly. Ms. M’s boss requests her to not to make any adjusting entry for the inventory shrinkage.

To Explain: The action of Ms. M for the above situation and its reason.

Answer 6

Chapter 5, Problem 5.1TIF

To determine

Inventory Shrinkage: It represents the loss of inventory. In other words, it refers to the difference between the amount of inventory shown in the accounting records and the actual inventory. The difference indicates the issues with the inventory caused due to lost, theft, clerical errors, damaged goods or spoilage.

In this case Company T is pressuring the accounting department to increase the earnings. Ms. M is an accountant in Company T. Ms. M’s boss already informed her that if the earnings will not increase then he will be terminated.

After the end of the fiscal year Ms. M compares the physical count to the balance in the inventory account, and finds a huge amount of inventory shrinkage. This amount is so huge that the earnings will drop significantly. Ms. M’s boss requests her to not to make any adjusting entry for the inventory shrinkage.

To Explain: The action of Ms. M for the above situation and its reason.

Answer 7

Chapter 5, Problem 5.1TIF

To determine

Inventory Shrinkage: It represents the loss of inventory. In other words, it refers to the difference between the amount of inventory shown in the accounting records and the actual inventory. The difference indicates the issues with the inventory caused due to lost, theft, clerical errors, damaged goods or spoilage.

In this case Company T is pressuring the accounting department to increase the earnings. Ms. M is an accountant in Company T. Ms. M’s boss already informed her that if the earnings will not increase then he will be terminated.

After the end of the fiscal year Ms. M compares the physical count to the balance in the inventory account, and finds a huge amount of inventory shrinkage. This amount is so huge that the earnings will drop significantly. Ms. M’s boss requests her to not to make any adjusting entry for the inventory shrinkage.

To Explain: The action of Ms. M for the above situation and its reason.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 5 - Prob. 1DQ Ch. 5 - Prob. 2DQ Ch. 5 - The credit period during which the buyer of...Ch. 5 - What is the meaning of (A) 1/15, n/60; (B) n/30;...Ch. 5 - Prob. 5DQ Ch. 5 - Prob. 6DQ Ch. 5 - Who is responsible for freight when the terms of...Ch. 5 - Name three accounts that would normally appear in...Ch. 5 - Audio Outfitter Inc., which uses a perpetual...Ch. 5 - Assume that Audio Outfitter Inc. in Discussion...

Solution Summary: The author explains that inventory shrinkage refers to the difference between the amount of inventory shown in the accounting records and the actual inventory.

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