Emerson St. Paul Book Shops accounts at June 30, 2015, included the following unadjusted balances:

Merchandise Inventory $ 5,400

Cost of Goods Sold 40,300

Sales Revenue 85,300

Sales Discounts 1,400

Sales Returns and Allowances 2,000

The cost associated with the physical count of inventory on hand on June 30, 2015, was $5,000.

Requirements

1.Journalize the adjustment for inventory shrinkage.

2.Compute the gross profit