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Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307
BuyFind

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307

Solutions

Chapter
Section
Chapter 5, Problem 5.6APE
Textbook Problem

Inventory shrinkage

Castle Furnishings Company's perpetual inventory records indicate that $675,400 of merchandise should be on hand on November 30, 2016. The physical inventory indicates that $663,800 of merchandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage for Castle Furnishings Company for the year ended November 30, 2016. Assume that the Inventory shrinkage is a normal amount.

Expert Solution
To determine

Inventory Shrinkage: It represents the loss of inventory. In other words, it refers to the difference between the amount of inventory shown in the accounting records and the actual inventory. The difference indicates the issues with the inventory caused due to lost, theft, clerical errors, damaged goods or spoilage.

To Record: The adjusting entry for inventory shrinkage.

Explanation of Solution

Explanation

  • Cost of merchandise sold is an expense account and it decreases the value of equity by $11,600. Therefore, debit cost of merchandise sold account with $11,600.
  • Merchandise inventory is an asset and it is decreased by $11,600. Therefore, credit merchandise inventory account with $11,600.

Working Note:

Calculate the inventory shrinkage.

unadjusted merchandise inventory = $675,400

Physical count of inventory = $663,800

Inventory�

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Chapter 5 Solutions

Financial & Managerial Accounting
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Ch. 5 - Gross profit During the current year, merchandise...Ch. 5 - Gross profit During the current year, merchandise...Ch. 5 - Purchases transactions Halibut Company purchased...Ch. 5 - Purchases transactions Hoffman Company purchased...Ch. 5 - Sales transactions Journalize the following...Ch. 5 - Sales transactions Journalize the following...Ch. 5 - Freight terms Determine the amount to be paid in...Ch. 5 - Freight terms Determine the amount to be paid in...Ch. 5 - Transactions for buyer and seller Sather Co. sold...Ch. 5 - Transactions for buyer and seller Shore Co. sold...Ch. 5 - Inventory shrinkage Castle Furnishings Company's...Ch. 5 - Inventory shrinkage Hahn Flooring Company's...Ch. 5 - Ratio of safes to assets Financial statement data...Ch. 5 - Ratio of sales to assets Financial statement data...Ch. 5 - Determining gross profit During the current year,...Ch. 5 - Determining cost of merchandise sold For a recent...Ch. 5 - Purchase-related transactions The Stationery...Ch. 5 - Purchase-related transactions A retailer is...Ch. 5 - Purchase-related transactions The debits and...Ch. 5 - Purchase-related transactions Warwick's Co., a...Ch. 5 - Purchase-related transactions Journalize entries...Ch. 5 - Sales-related transactions, including the use of...Ch. 5 - Customer returns and allowances Zell Company had...Ch. 5 - Sales-related transactions After the amount due on...Ch. 5 - Sales-related transactions The debits and credits...Ch. 5 - Sales-related transactions Merchandise is sold on...Ch. 5 - Determining amounts to be paid on invoices...Ch. 5 - Sales-related transactions Showcase Co., a...Ch. 5 - Purchase-related transactions Based on the data...Ch. 5 - chart of accounts Monet Paints Co. is a newly...Ch. 5 - Sales tax A sale of merchandise on account for...Ch. 5 - Sales tax transactions Journalize the entries to...Ch. 5 - Normal balances of merchandise accounts What is...Ch. 5 - Income statement and accounts for merchandiser a....Ch. 5 - Income statement for merchandiser The following...Ch. 5 - Determining amounts for items omitted from income...Ch. 5 - Multiple-step income statement On October 31,...Ch. 5 - Multiple-step income statement Identify the errors...Ch. 5 - Single-step income statement Summary operating...Ch. 5 - Adjusting entry for merchandise inventory...Ch. 5 - Closing the accounts of a merchandiser From the...Ch. 5 - Closing entries; net income Based on the data...Ch. 5 - Closing entries On July 31, 2016, the balances of...Ch. 5 - Ratio of sales to assets The Home Depot reported...Ch. 5 - Ratio of sales to assets Kroger, a national...Ch. 5 - Rules of debit and credit for periodic inventory...Ch. 5 - Journal entries using the periodic inventory...Ch. 5 - Identify items missing in determining cost of...Ch. 5 - Cost of merchandise sold and related items The...Ch. 5 - Cost of merchandise sold Based on the following...Ch. 5 - Cost of merchandise sold Based on the following...Ch. 5 - Cost of merchandise sold Identify the errors in...Ch. 5 - Closing entries using periodic inventory system...Ch. 5 - Purchase-related transactions using perpetual...Ch. 5 - Sales-related transactions using perpetual...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Multiple step income statement and report form of...Ch. 5 - Single-step income statement and account form of...Ch. 5 - Appendix Purchase-related transactions using...Ch. 5 - Appendix Sales-related and purchase-related...Ch. 5 - Appendix Sales-related and purchase-related...Ch. 5 - Periodic inventory accounts, multiple-step income...Ch. 5 - Purchase-related transactions using perpetual...Ch. 5 - Sales-related transactions using perpetual...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Multiple-step income statement and report form of...Ch. 5 - Single-step income statement and account form of...Ch. 5 - Appendix Purchase-related transactions using...Ch. 5 - Appendix Sales-related and purchase-related...Ch. 5 - Appendix Sales-related and purchase-related...Ch. 5 - Periodic inventory accounts, multiple-step income...Ch. 5 - Continuing problem Palisade Creek Co. is a...Ch. 5 - Ethics and professional conduct in business On...Ch. 5 - Purchases discounts and accounts payable Rustic...Ch. 5 - Determining cost of purchase The following is an...Ch. 5 - Sales discounts Your sister operates Watercraft...

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