Highlight Manufacturing Company uses a perpetual inventory system for its raw materials.The inventory records reflect a raw materials balance of $478,500 at December 31.A physical inventory taken on that date revealed raw materials of $475,750.How will the $2,750 difference affect raw materials inventory and cost of goods sold,assuming it is attributed to normal shrinkage? Raw Materials Cost of Goods Sold

Question

Quizplus · Accepted Answer

The $2,750 difference represents a decrease in inventory due to normal shrinkage. Therefore, the raw materials inventory will decrease by $2,750 and the cost of goods sold will increase by the same amount, as the cost of the missing raw materials will now be included in the cost of goods sold.

Highlight Manufacturing Company Uses a Perpetual Inventory System for Its