Emerson St. Paul Book Shop's accounts at June 30, 2017, included the following unadjusted balances:
Merchandise Inventory................................... $ 5,400
Cost of Goods Sold ........................................ 40,300
Sales Revenue ................................................. 85,300
Sales Discounts ................................................. 1,400
Sales Returns and Allowances.......................... 2,000
St. Paul Book Shop uses a perpetual inventory system. The cost calculated from the physical count of inventory on hand on June 30, 2017, was $5,000.
a. Journalize the adjustment for inventory shrinkage.
b. Compute the gross profit.