At the Year-End,the Perpetual Inventory System of Horran Company Indicated $\begin{array}{lcc}\text { Inventory Shrinkage Expense} & 30 & \\\quad \text { Inventory} & &30 & \\\end{array}$

question 117

Multiple Choice

At the year-end,the perpetual inventory system of Horran Company indicated an ending inventory level of 190 units at a cost of $5 each.A physical count performed at year-end resulted in 184 units being on hand at a cost of $5 each.What journal entry,if any,is necessary at year-end?

• A)No journal entry is necessary.
• B)\(\begin{array}{lcc}
• \text { Inventory Shrinkage Expense} & 30 & \\
• \quad \text { Inventory} & &30 & \\
• \end{array}\)
• C)\(\begin{array}{lccc}
• \text { Cost of Goods Sold } & 30 \\
• \quad \text { Inventory Shrinkage Expense } & &30 & \\
• \end{array}\)
• D)\(\begin{array}{lccc}
• \text { Inventory Shrinkage Expense } & 30 \\
• \quad \text { Cost of Goods Sold } && 30 & \\
• \end{array}\)
• E)\(\begin{array}{lccc}
• \text { Inventory } & 30\\
• \quad\text { Cost of Goods Sold } && 30 \\
• \end{array}\)

---

Definitions:

Litigation Settlement

The resolution of a legal dispute before the court issues a final verdict, often involving payment to the aggrieved party.

Related-Party Transactions

Transactions occurring between parties where one is able to exert significant influence over the operations of the other, such as between a parent company and its subsidiary.

Affiliated Entities

Affiliated entities are companies that are related through common ownership or control, potentially impacting financial statements and disclosures.

Report Form

A layout of financial statements where the balance sheet is presented vertically, with assets listed first, followed by liabilities and equity.