Chapter 5, Problem 5.21E

Journalizing adjusting entries and computing gross profit

Dog-eared Book Shop’s accounts at June 30, 2016, included the following unadjusted balances:

Merchandise Inventory	$ 5,800
Cost of Goods Sold	33,750
Sales Revenue	75,000
Sales Discounts	1,100
Sales Return s and Allowances	2,500

The cost associated with the physical count of inventory on hand on June 30, 2016, was $5,300.

Requirements

1. 1. Journalize the adjustment for inventory shrinkage.
2. 2. Compute the gross profit.