Response to the following problem:
Assume that Bernard Office Equipment in Question experienced an abnormal inventory shrinkage of $315,750. It has decided to record the abnormal inventory shrinkage so that it would be separately disclosed on the income statement. What account would be debited for the abnormal inventory shrinkage?
Question:
Bernard Office Equipment, which uses a perpetual inventory system, experienced a normal inventory shrinkage of $19,290.
(a) What accounts would be debited and credited to record the adjustment for the inventory shrinkage at the end of the accounting period?
(b) What are some causes of inventory shrinkage?