📦Inventory
Inventory Shrinkage Adjusting Entry
Record shrinkage found during physical count.
Scenario
Books show $84,000 inventory; physical count shows $81,500.
Journal Entries
Record $2,500 shrinkage.
| Account | Debit | Credit |
|---|---|---|
| Inventory Shrinkage Expense | $2,500 | |
| Inventory | $2,500 |
Explanation
Shrinkage adjustments align ledger with physical reality before reporting.
Variations
Use COGS instead of separate shrinkage account by policy.
Common Mistakes to Avoid
- ✗Ignoring small discrepancies until year-end.
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Common questions about this journal entry
At period-end after count reconciliation.
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