What journal entry is required after the inventory count under the perpetual inventory system when shrinkage has been detected?
A) Dr Cost of goods sold
Cr Inventory
B) Dr Cost of goods sold
Cr Inventory
$\mathrm { Cr }$ Purchases
C) Dr Inventory
Cr Accounts Payable
D) Dr Purchases
Cr Accounts Payable

Question

Quizplus · Accepted Answer

Shrinkage represents a loss of inventory due to theft, damage, or other reasons. Under the perpetual inventory system, the value of shrinkage is immediately recognized in the cost of goods sold account. Therefore, the journal entry to record shrinkage is to debit Cost of goods sold and credit Inventory.

What Journal Entry Is Required After the Inventory Count Under Cr\mathrm { Cr }Cr

What Journal Entry Is Required After the Inventory Count Under $\mathrm { Cr }$