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The inventory records of Global Company indicate that $76,800 of merchandise should be on hand at the end of the month. The physical inventory indicates that $74,900 is actually on hand. The journal entry to adjust for inventory shrinkage will include

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Answer:

Debit : Inventory $1,900

Credit : Adjustment to inventory account $1,900

Explanation:

The journal entry to adjust for inventory shrinkage will include a Debit entry to Inventory Account (to raise the balance) and a Credit entry to a Contra account Adjustment to inventory account with the difference between the two balances.

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