Question

Nix’It Company’s ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balances (Nix’It uses the perpetual inventory system).

Merchandise inventory $ 42,300, Sales returns and allowances $ 5,600, Retained earnings 124,300, Cost of goods sold 107,700, Dividends 7,000, Depreciation expense 11,200, Sales 159,100, Salaries expense 37,000, Sales discounts 3,800, Miscellaneous expenses 5,000, A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $40,700.

• Record the adjustment for inventory shrinkage based on physical count.

Note: Enter debits before credits.

	Date General Journal Debit Credit July 31

Answer 1

• Record the adjustment for inventory shrinkage based on physical count.

Note: Enter debits before credits.

	Date General Journal Debit Credit July 31 Cost of goods sold (42300-40700) 1600 Merchandise inventory 1600 (to record inventory shrinkage)