PE 6-6B Inventory shrinkage

Zurich Company’s perpetual inventory records indicate that $1,380,000 of merchandise
should be on hand on August 31, 2012. The physical inventory indicates that $1,315,900
of merchandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage
for Zurich Company for the year ended August 31, 2012. Assume that the inventory
shrinkage is a normal amount.

Answer:
Aug. 31 Cost of Merchandise Sold........................................ 64,100
                                 Merchandise Inventory ....................................... 64,100
                                       Inventory shrinkage
                                      ($1,380,000 – $1,315,900).