In the general ledger, the balance in the Inventory account on December 31, 20Y1 is $850,000. The physical inventory indicates that $832,000 of merchandise is actually on hand. The adjusting entry for the inventory shrinkage for the year ended December 31, 20Y1 includes a debit to Cost of Goods Sold for $832,000. credit to Inventory for 832,000. debit to Cost of Goods Sold for $18,000. debit to Inventory for $18,000