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27 November, 17:03

Novak Corp. had the following account balances at year-end: Cost of Goods Sold $61,200; Inventory $14,550; Operating Expenses $29,960; Sales Revenue $120,310; Sales Discounts $1,080; and Sales Returns and Allowances $1,750. A physical count of inventory determines that merchandise inventory on hand is $12,180.

Prepare the adjusting entry necessary as a result of the physical count.

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  1. 27 November, 17:23
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    Journal entry

    Explanation:

    The adjusting entry for the physical count is as follows

    Cost of goods sold $2,370

    To Inventory $2,370

    (Being the adjusted balance is recorded)

    The computation is shown below:

    = Year end Inventory - physical count of inventory

    = $14,550 - $12,180

    = $2,370

    We simply deducted the physical count of inventory from the year end inventory to find out the adjusted balance which is shown above
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