Highlight Manufacturing Company uses a perpetual inventory system for its raw materials. The inventory records reflect a raw materials balance of $478,500 at December 31 . A physical inventory taken on that date revealed raw materials of $475,750 . How will the $2,750 difference affect raw materials inventory and cost of goods sold, assuming it is attributed to normal shrinkage? Raw Materials
Cost of Goods Sold
a. Increase Decrease
b. Decrease No effect
c. Decrease Increase
d. No effect Increase
C
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