Juan Morales Company had the following account balances at year-end: Cost of Goods Sold $60,430; Inventory $14,340; Operating Expenses $29,560; Sales Revenue $124,430; Sales Discounts $1,120; and Sales Returns and Allowances $1,830. A physical count of inventory determines that merchandise inventory on hand is $13,050.

Prepare the adjusting entry necessary as a result of the physical count.

1. Account Titles and Explanation

Debit Credit

2. Account Tiles and Explanation

Debit Credit