Mooncake Company uses the perpetual inventory method. The unadjusted balance in the company's Merchandise Inventory account is $120,000 at December 31, 2014. A physical count of its inventory on that date discloses that the cost of the merchandise inventory available is $119,000. How would the company record the adjusting entry relating to the inventory shrinkage at December 31, 2014?

	Debit Merchandise Inventory for $1,000 and credit Cost of Goods Sold for $1,000.
	Debit Cost of Goods Sold for $1,000 and credit Merchandise Inventory for $1,000.
	Debit Merchandise Inventory for $1,000 and credit Purchases for $1,000.
	Debit Purchases Expense for $1,000 and credit Merchandise Inventory for $1,000.
	Debit for Merchandise Inventory for $1,000 and credit Inventory Shrinkage Expense for $1,000.

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ANS WER Deb it Merch andise Inventory for 1 000 and credit Inv... View the full answer