The Peggy Ahlers Company Uses the Perpetual Inventory System and the FIFO

Multiple Choice

The Peggy Ahlers Company uses the perpetual inventory system and the FIFO method. At the end of the fiscal year, December 31, 2015, the company conducted a physical count of the inventory on hand at all warehouses and stores. The FIFO cost of the physical count is $1,005,400. According to the records, ending inventory using FIFO is $1,122,000. Which journal entry is required at December 31, 2015?

A) No journal entry is required.
B) Debit Inventory $116,600 and credit Allowance to Reduce Inventory $116,600.
C) Debit Cost of Goods Sold $116,600 and credit Allowance to Reduce Inventory $116,600.
D) Debit Loss on Inventory Shortage $116,600 and credit Inventory $116,600.