Adjusting entries Obj. 3 Castle Furnishings Company uses a perpetual inventory system. Journalize the November 30 adjusting entries based upon the following:

a. The inventory account has a balance of $675,400, while physical inventory indicates that $663,800 of merchandise is on hand. Assume any shrinkage is a normal amount.

b. Sales returns of $40,000 and merchandise returns of $15,000 are estimated for the current year's sales.

AppendixLO1