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Omega Tire Co.'s perpetual inventory records indicate that $3,145,000 of merchandise
should be on hand on August 31. The physical inventory indicates that $3,113,500 of mer-
chandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage for
Omega Tire Co. for the fiscal year ended August 31.

Respuesta :

anthougo

The adjusting journal entry for the inventory shrinkage for Omega Tire Co. for the fiscal year ended August 31 is as follows:

Adjusting Journal Entry:

Debit Cost of Goods Sold $31,500

Credit Inventory $31,500

What is inventory shrinkage?

Inventory shrinkage is a situation where the accounting records show that the value of ending inventory is more than its value based on the physical inventory count.

Inventory shrinkage is usually caused by any of the following factors:

  • Employee theft
  • Shoplifting
  • Administrative errors
  • Vendor fraud
  • Product damage.

Thus, inventory shrinkage increases the cost of goods sold.

Transaction Analysis:

Inventory based on the perpetual inventory records = $3,145,000

Inventory based on the physical inventory count = $3,113,500

Difference (Shrinkage in inventory) = $31,500 ($3,145,000 - $3,113,500)

Cost of Goods Sold $31,500  Inventory $31,500

Learn more about inventory shrinkage at https://brainly.com/question/5662414

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