question archive The Merchandise Inventory account balance is $50,000
The Merchandise Inventory account balance is $50,000
Subject:BusinessPrice:2.88 Bought3
The Merchandise Inventory account balance is $50,000. A physical count of inventory reveals that actual inventory balance is $42,000. Which of the following would be included in the adjusting entry? (Assume a perpetual inventory system.)
a. $42,000 credit to Merchandise Inventory
b. $50,000 debit to Cost of Goods Sold
c. $8,000 credit to Cost of Goods Sold
d. $8,000 credit to Merchandise Inventory
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Answer: d. $8,000 credit to Merchandise Inventory
Explanation:
Since the physical inventory count reveals a balance of $42,000 but the accounting system has a balance of $50,000 then the accounting systems inventory balance needs to be reduced to match the inventory balance per the physical inventory count. Cost of goods sold needs to be debited and increased and the merchandise inventory account needs to be credited and decreased.
