The general ledger shows a balance of $65 300 in the Inventory account at the end of the period. A physical inventory shows a count of $67 900. The adjusting entry would be a:
A)debit to Cost of sales and a credit to Cash.
B)debit to Inventory and a credit to Cash.
C)debit to Inventory and a credit to Cost of sales.
D)debit to Cost of sales and a credit to Inventory.

Question

Quizplus · Accepted Answer

The physical inventory count is higher than the ledger balance, indicating an under-recording of inventory. To adjust, debit Inventory to increase it and credit Cost of sales to decrease it, reflecting the correct inventory value.

The General Ledger Shows a Balance of $65 300 in the Inventory