York Merchandising Company Uses a Perpetual Inventory System

question 170

Essay

York Merchandising Company uses a perpetual inventory system.At the end of the accounting period,a physical count of merchandise inventory reveals a balance of $76,500.The books show a balance of $78,200.
(a)Prepare the adjusting entry.Omit explanation.
(b)Discuss the possible causes for the difference between the physical count and the balance in the books.
(c)How does this affect net income?

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Definitions:

Tax

A compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Price

The amount of money exchanged for a good or service, influenced by factors like supply and demand, production costs, and market competition.

Tax Revenue

The income that is collected by the government through various forms of taxes from individuals and businesses.

Government

An organization, often a group of people, with the authority to govern a country or state.