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4. Jahn Company had the following balances in its general ledger at December 31, 2017: Inventory (as of January 1, 2017) $210,000 Purchases 440,000 Purchase returns and allowances 5,000 Assuming that a physical count of inventory on December 31, 2017, revealed inventory on hand costing $195,000, prepare the journal entries needed to adjust the inventory records and close the related purchases accounts, assuming the periodic inventory system is used (1) ANS: Dr. Inventory Purchase Returns and Allowances Cr. Purchases To close the purchases accounts. 435,000 5,000 440,000 Dr. Cost of Goods Sold 450,000 Cr. Inventory 450,000 To record the Cost of Goods Sold and adjust Inventory to $185,000 balance. ($440,000 + $210,000 - $5,000 - $195,000 = $450,000)