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Adjusting entries

Hahn Flooring Company uses a perpetual inventory system. Journalize the December $31$ adjusting entries based upon the following:

a$.$ The inventory account has a balance of $$1,339,700,$ while physical inventory indicates that $$1,301,800$ of merchandise is on hand. Assume any shrinkage is a normal amount. If an amount box does not require an entry, leave it blank.

Dec. $31$ X

$37,900$

Inventory $$

$37,900$

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a$.$ Inventory shrinkage is recorded by decreasing merchandise inventory and increasing cost of merchandise sold for the difference between the perpetual inventory records and the inventory on hand.

b$.$ Sales refunds and allowances of $$255,670$ and merchandise returns of $$62,170$ are estimated for the current year's sales. If an amount box does not require an entry, leave it blank.

Dec. $31$ Sales $$

x

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