JournaldrillInventory shrinkage
A journal entry exercise from Journaldrill. Solve it with an account picker and debit and credit fields in your browser, and it is checked the moment you submit.
The task
Tidewater Market uses a perpetual inventory system. At year end its records show an Inventory balance of $42,300, but a physical count finds only $41,650 of merchandise on hand. The company charges shrinkage to Cost of Goods Sold.
What this exercise teaches
The count is $650 lower than the records ($42,300 - $41,650), which reflects theft, breakage or errors. Inventory is credited to match the count, and Cost of Goods Sold is debited for the missing merchandise under the company's policy.
A hint if you get stuck
Bring the book balance down to the physical count and treat the missing goods as part of the cost of selling.
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