Rally Company is a retailer that performed a physical inventory count on December 31, 2019. The physical goods counted (before adjustment for in-transit items) totaled $425,000. At 12/31/2019, Rally's general ledger reported $575,000 of merchandise inventory. Assume that Rally records the inventory shrink (if any) in the same manner as discussed in your assigned readings. 

Rally provides the following information to you regarding purchases/sales of goods occurring around 12/31/2019: 

Date Goods Shipped Goods Delivered Terms: 

Transaction Description 12/26/2019 1/2/2020 FOB Shipping Point 

Rally purchased $25,000 of merchandise 12/27/2019 1/3/2020 

FOB Destination 

Rally sold $50,000 of merchandise (with a historical cost of $25,000) 12/28/2019 1/4/2020 

FOB Shipping Point Rally sold $50,000 of merchandise (with a historical cost of $25,000) 12/29/2019 1/5/2020 

FOB Destination Rally purchased $25,000 of merchandise 12/30/2019 1/6/2020 

FOB Destination Rally sold $50,000 of merchandise (with a historical cost of $25,000) 

Consider the above information and determine the value of Rally's inventory shrink resulting from the 12/31/2019 physical inventory. 

A. None of the other answers provided are correct. 

B. $50,000 

C. $75,000 

D. $150,000 

E. $25,000