Thursday, May 15, 2008

Accounting Inventory Shrinkage Example Problem

Accounting Inventory Shrinkage is defined as a loss of inventory computed by comparing physical count of inventory with recorded amounts.

Reasons for Inventory Shrinkage
  1. Theft
  2. Obsolescence
  3. Spoilage
  4. Damage
  5. Customer Grazing
  6. Display Items
Journal Entry for Inventory Shrinkage

Debit COGS
Credit Merchandise Inventory

Additional Inventory Accounting Examples:
Perpetual Inventory System
Basic Equation for Inventory Accounts
Inventory Cost Flow Assumptions

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