Frisco company's merchandise inventory account at year-end has a balance of $62,115, but a physical count reveals that only $61,900 of inventory exists. the adjusting entry to record this $215 of inventory shrinkage is:
The cost of goods sold will increase by $215, while the merchandise inventory will decrease by a value of $215. This will even out the books to show that there was a shrinkage at the end of the year over and above that which was thought to have taken place.
