Zenith Company's Merchandise Inventory account at year-end has a balance of $91,820, but a physical count reveals that only $90,450 of inventory exists. The adjusting entry to record this $1,370 of inventory shrinkage is:
A.
| Inventory shrinkage expense | 1,370 | |
| Cost of goods sold | 1,370 |
B.
| Merchandise inventory | 1,370 | |
| Inventory shrinkage expense | 1,370 |
C.
| Cost of goods sold | 1,370 | |
| Merchandise inventory | 1,370 |
D.
| Cost of goods sold | 90,450 | |
| Merchandise inventory | 90,450 |
E.
| Purchases discounts | 1,370 | |
| Cost of goods sold | 1,370 |
Answer: C
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