E.Flynn Company uses a perpetual inventory system and reported $500,000 of inventory at the beginning of the month based on a physical count of inventory. During the month, the company bought $45,000 of inventory and sold inventory that had cost $30,000. At the end of the month, the physical count of inventory shows $510,000 on hand. How much shrinkage occurred during the month?

Question

Quizplus · Accepted Answer

The expected ending inventory is $515,000 ($500,000 beginning + $45,000 purchases - $30,000 cost of goods sold). The physical count shows $510,000, indicating a shrinkage of $5,000.

EFlynn Company Uses a Perpetual Inventory System and Reported $500,000