Reference no: EM132723912

Nix'It Company's ledger on July 31,its fiscal year-end, includes the following selected accounts that have normal balances (Nix;It uses the perpetual inventory system).

Merchandise inventory $38,800                Sales returns and allowances $6300
T. Nix, Capital $117,300                        Cost of good sold $105,600
T. Nix, withdrawals $7000                      Depreciation expense $10,500
Sales $159,800                                   Salaries expense $33,500
Sales discounts $3100                        Miscellaneous Expense $5000

A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $37,550.

Problem 1: Prepare the entry to record any inventory shrinkage based on physical count.