QS 5-14 (Static) Accounting for shrinkage-perpetual system LO P3 Telo Company's ledger on July 31, its fiscal year-end, shows merchandise inventory of $37,800 before accounting for any shrinkage. A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $35,900. Prepare the entry to record any inventory shrinkage. Journal entry worksheet Record the adjustment for inventory shrinkage based on physical count. The company uses the perpetual inventory system. Note: Enter debits before credits