Question

"Suppose​ Dave's Discount's Merchandise Inventory account showed a balance of​ $8,000 before the​ year-end adjustments. The physical count of goods on hand totaled​ $7,400. Dave uses a perpetual inventory system. To adjust the​ accounts, which entry would the company​ make?"

Answer 1

Answer and Explanation:

Given:

Merchandise Inventory balance = $8,000

Goods on hand = $7,400

Adjustment entry:

                             Books of (--- limited)

                                   Journal entry                                              

Date        Account Title and Explanation       Debit    Credit    

           Cost of Goods Sold          A\c Dr.       $600

            Merchandise Inventory    A\c Cr.                      $600

(Being Inventory recorded under perpetual inventory system)

Note: Cost of goods sold adjusted = $8,000 - $7,400 = $600