The general ledger shows a balance of $23 678 in the Inventory account at the end of the period. A physical inventory shows a count of $22 078. The adjusting entry would be a:
A)debit to Cost of sales and a credit to Cash.
B)debit to Cost of sales and a credit to Inventory.
C)debit to Inventory and a credit to Cost of sales.
D)debit to Inventory and a credit to Cash.

Question

Quizplus · Accepted Answer

The physical inventory count is less than the ledger balance, indicating a loss or shrinkage. The adjusting entry should reduce the Inventory account and increase the Cost of Sales to reflect the actual inventory used or lost.

The General Ledger Shows a Balance of $23 678 in the Inventory