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29 August, 06:57

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?

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  1. 29 August, 07:24
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    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
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