View Policies Current Attempt in Progress Assuming the company uses the earnings approach for revenue recognition, in a perpetual system, if the accounting records show an ending inventory balance of $22400 and a physical count shows a balance of $20400, it is necessary to debit Cost of Goods Sold and credit Merchandise Inventory for $2000. O debit Sales Returns and Allowances and credit Merchandise Inventory for $2000. O debit Merchandise Inventory and credit Cost of Goods Sold for $2000. O debit Cost of Goods Sold and credit Sales Returns and Allowances for $2000. Save for Later Attempts: 0 of 1 used Submit