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

question 90

Multiple Choice

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

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

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Definitions:

Tort Remedies

Refers to the legal means available to a court to compensate an individual who has suffered harm due to another's wrongful act, including compensation for damages, injunctions, and restitution.

Indemnification

A legal obligation by one party to compensate another for the loss or damage that has been incurred.

Duty of Performance

The legal obligation of parties in a contract to fulfill their respective tasks or services as outlined in the agreement.

Agency Agreement

A legal contract creating a fiduciary relationship whereby the first party ("the principal") agrees that the actions of a second party ("the agent") binds the principal to later agreements made by the agent as if the principal had himself personally made the later agreements.