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The records of Penny Co. indicated that $397,150 of merchandise should be on hand on December 31. The physical inventory indicates that $393,973 of merchandise is actually on hand.

Required:

Journalize the adjusting entry for the merchandise inventory shrinkage for the year ended December 31. Refer to the Chart of Accounts for exact wording of account titles.

Chart of Accounts

CHART OF ACCOUNTS
Penny Co.
General Ledger
ASSETS 110 Cash 120 Accounts Receivable 125 Notes Receivable 130 Merchandise Inventory 131 Estimated Returns Inventory 140 Supplies 142 Prepaid Insurance 180 Land 190 Equipment 191 Accumulated Depreciation LIABILITIES 210 Accounts Payable 216 Salaries Payable 221 Sales Tax Payable 222 Customers Refunds Payable 231 Unearned Rent 241 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 313 Income Summary	REVENUE 410 Sales EXPENSES 510 Cost of Merchandise Sold 521 Delivery Expense 522 Advertising Expense 523 Depreciation Expense 526 Salaries Expense 531 Rent Expense 533 Insurance Expense 534 Supplies Expense 536 Credit Card Expense 560 Miscellaneous Expense 710 Interest Expense

General Journal

Journalize the adjusting entry for the merchandise inventory shrinkage for the year ended December 31. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2

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