At the end of the year, assume the balance of inventory is $110,825 and physical inventory on hand is $106,320. The adjusting entry to journalize shrinkage will be a:
a) Debit to Inventory for $4,505 and credit to Cost of Goods Sold for $4,505
b) Debit to Cost of Goods Sold for $4,505 and credit to Inventory for $4,505
c) Debit to Inventory for $110,825 and credit to Cost of Goods Sold for $110,825
d) Debit to Cost of Goods Sold for $110,825 and credit to Inventory for $110,825
