If the inventory shows an actual count of $405 and the perpetual inventory according to the records shows $420, the adjusting entry for the $15 would:
A)debit Cost of Goods Sold; credit Inventory.
B)debit Cost of Goods Sold; credit Purchase Returns and Allowances.
C)debit Inventory; credit Cost of Goods Sold.
D)debit Inventory; credit Purchase Returns and Allowances.

Question

Quizplus · Accepted Answer

When the actual inventory is less than the recorded amount, the difference is recognized as an additional cost of goods sold. Therefore, Cost of Goods Sold is debited, and Inventory is credited to adjust the inventory account down to its actual level.

If the Inventory Shows an Actual Count of $405 and the Perpetual