Ashton Company uses the perpetual method.The company's inventory account had a $6,600 balance as of December 31,2016.A physical count of inventory shows only $5,900 of merchandise in stock at December 31,2016.The entry to recognize the missing inventory will

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The entry to recognize the missing inventory will be a debit to Cost of Goods Sold (an expense account) for $700 and a credit to Inventory (an asset account) for $700. This will increase the expense and decrease assets, but it will not affect cash flow from operating activities.

Ashton Company Uses the Perpetual Method