Instructions Chart of Accounts Journal Instructions Hahn Flooring Company uses a perpetual inventory system. A. The inventory account has a balance of $699,050, while physical inventory indicates that $688,150 of merchandise is on hand. B. Sales returns of $90,050 and merchandise returns of $41,500 are estimated for the current year's sales. Journalize the December 31 adjusting entries based on the above transactions. Assume that the inventory shrinkage is a normal amount. Refer to the Chart of Accounts for exact wording of account titles.