If the Physical Count of Inventory Revealed $158,000 of Merchandise

question 222

Multiple Choice

If the physical count of inventory revealed $158,000 of merchandise on hand and the inventory records reported $163,000, what would be the necessary adjusting entry to record inventory shrinkage?

• A) debit Merchandise Inventory, $158,000; credit Cost of Merchandise Sold, $158,000
• B) debit Merchandise Inventory, $5,000; credit Cost of Merchandise Sold, $5,000
• C) debit Cost of Merchandise Sold, $163,000; credit Merchandise Inventory, $158,000
• D) debit Cost of Merchandise Sold, $5,000; credit Merchandise Inventory, $5,000

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