Question

WeLoseThings, Inc. currently reports $500,000 of inventory on its trial balance. Management just performed an inventory count and found only $485,000 of inventory. What account should be debited to record this shrinkage?

Answer 1

Answer:

Shrinkage expense

Explanation:

The journal entry is shown below:

Shrinkage expense A/c Dr $15,000

       To Inventory A/c $15,000

(Being the shrinkage is recorded)

The computation is shown below"

= Current inventory amount - actual inventory amount

= $500,000 - $485,000

= $15,000

Simply we debited the shrinkage expense account and credited the inventory account so that the correct posting can be done