Paragon Tire Co.’s perpetual inventory records indicate that $2,780,000 of merchandise should be on hand on March 31, 2019. The physical inventory indicates that $2,734,800 of merchandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage for Paragon Tire Co. for the year ended March 31, 2019.
Answer:
Cost of Merchandise Sold 45,200
Merchandise Inventory 45,200
Inventory shrinkage ($2,780,000 – $2,734,800).