A Company's Ledger Shows an Inventory Balance of $20,000 and a Physical

question 31

Multiple Choice

A company's ledger shows an Inventory balance of $20,000 and a physical count of the inventory shows $19,000. Which of the following entries is needed to record the shrinkage?

• A) \(\begin{array} { | r | r | r | }
• \hline \text { Cost of goods sold } & 1,000 & \\
• \hline \text { Shrinkage expense } & & 1,000 \\
• \hline
• \end{array}\)
• B) \(\begin{array} { | r | r | r | }
• \hline \text { Inventory } & 1,000 & \\
• \hline \text { Cost of goods sold } & & 1,000 \\
• \hline
• \end{array}\)
• C) \(\begin{array} { | c | r | r | }
• \hline \text { Cost of goods sold } & 1,000 & \\
• \hline \text { Inventory } & & 1,000 \\
• \hline
• \end{array}\)
• D) \(\begin{array} { | c | r | r | }
• \hline \text { Cash } & 1,000 & \\
• \hline \text { Inventory } & & 1,000 \\
• \hline
• \end{array}\)

---

Definitions:

Iroquois

A historically powerful northeast Native American confederacy, known also as the Haudenosaunee, consisting of six nations: Mohawk, Oneida, Onondaga, Cayuga, Seneca, and Tuscarora.

Navajos

A Native American people of the Southwestern United States, known for their rich culture, including weaving and jewelry making.

Nation-State

A sovereign state whose citizens or subjects are relatively homogenous in factors such as language or common descent.

Regional Differences

Variabilities in customs, dialects, climates, or economic conditions among various areas within a country or between countries.