Using a perpetual inventory system, if Shediac Video Store's accounting records show an ending inventory balance of $25,000 and a physical count shows a balance of $23,000, it is necessary to
A) debit its inventory records.
B) purchase additional inventory.
C) remove the nonexistent inventory from its records.
D) credit Cost of Goods Sold.

Question

Quizplus · Accepted Answer

The discrepancy indicates that the accounting records have $2,000 worth of inventory that does not physically exist. Therefore, it is necessary to adjust the records to reflect the actual inventory by removing the nonexistent inventory.

Using a Perpetual Inventory System, If Shediac Video Store's Accounting