If Shrinkage Is Found for $400, an Adjusting Entry Would

Multiple Choice

If shrinkage is found for $400, an adjusting entry would be made as follows:

A) debit Inventory for $400; credit Cost of Goods Sold for $400.
B) debit Inventory for $400; credit Sales Returns and Allowances for $400.
C) debit Cost of Goods Sold for $400; credit Inventory for $400.
D) debit Sales Returns and Allowances for $400; credit Inventory for $400.