=+E4-24 Adjusting entry for merchandise inventory shrinkage Obj 7 Teramycin Inc.’s perpetual inventory records indicate that $715,275 ofmerchandise should be on hand on January 31, 2008. The physical inventory indicates that $698,150 ofmerchandise is actually on hand. Illustrate the effects on the accounts and financial statements ofthe inventory shrinkage for Teramycin Inc. for the year ended January 31, 2008.

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