Candy Creations' accounts at June 30 included these unadjusted balances:

The physical count of inventory on hand added up to $5,400. This is the only adjustment needed.

a. Journalize the adjustment for inventory shrinkage. Include an explanation.

b. Journalize the closing entries for the appropriate accounts.

c. Compute the gross profit.

Transcribed Image Text:

Inventory Cost of goods sold Sales revenue Sales discounts Sales returns and allowances $ 5,600 41,200 86,900 900 1,400