The trial balance of Premier Lighting Co. shows Merchandise Inventory of $35,000. The company uses the periodic inventory system. Based on a count taken on December 31, merchandise inventory at the end of the year actually totaled $28,000. The adjusting entry to remove the old merchandise inventory balance would be:

Question

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Under the periodic inventory system, the adjustment to correct the inventory balance involves removing the old balance by crediting Merchandise Inventory and debiting an appropriate account, which is typically the Income Summary account, to reflect the cost of goods sold during the period.

The Trial Balance of Premier Lighting Co