how to adjust inventory?

Question

Accnt records indicate that closing inventory is $43200 but physical stocktake shows actual inventory on hand $42 500.How to make changes in balance sheet and income statement?

Answer 1

Pass an adjusting entry:
Dr COGS $700
Cr Ending inventory $700
Your income (or profit) will decrease by $700 because of the inventory shrinkage.

Answer 2

Depending on what the business has determined what a material amount is:

If the loss of $700 is immaterial to the business, a debit to cost of goods sold of $700 (on the income statement) and a credit to inventory of $700 (balance sheet) would occur.

If the loss of $700 is material to the business, a debit of $700 to an expense account (on the income statement), such as loss of inventory expense would occur, and a credit to inventory of $700 (balance sheet).

Both of these methods will affect net income/loss, but the loss will only be clearly shown with the second method, and expenses will be greater. In the first method, gross profit will be less, expenses will stay the same.

Answer 3

Who did your fisical inventory?, i they counted more, GOOD!

Good Luck!!!

Answer 4

purchases? less sales? production costs?