Windsor,Inc.uses a perpetual inventory system and reported $250,000 of inventory at the beginning of the month based on a physical count of inventory.During the month,the company bought $22,500 of inventory and sold inventory that had cost $15,000.At the end of the month,the physical count of inventory shows $255,000 on hand.How much shrinkage occurred during the month?
A)$17,500
B)$12,500
C)$2,500
D)$5,000

Question

Quizplus · Accepted Answer

A difference between the physical inventory count and the inventory account balance is considered shrinkage.$250,000 + $22,500 − $15,000 = $257,500 inventory account balance.A physical count of $255,000 reveals a difference of $2,500.