Retro Companys perpetual inventory records indicate that $975,000 of merchandise should be on hand on October 31,

Question:

Retro Company’s perpetual inventory records indicate that $975,000 of merchandise should be on hand on October 31, 2010. The physical inventory indicates that $894,750 of merchandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage for Retro Company for the year ended October 31, 2010. Assume that the inventory shrinkage is a normal amount.