Young Corporation Used a Perpetual Inventory System

Multiple Choice

Young Corporation used a perpetual inventory system. By physical count, ending Merchandise Inventory is $82,300. The balance in the Merchandise Inventory account is $80,500. Which of the following is the correct adjusting entry?

A) A debit to Income Summary of $1,800, and a credit to Merchandise Inventory of $1,800
B) A debit to Merchandise Inventory of $1,800, and a credit to Income Summary of $1,800
C) A debit to Cost of Goods Sold of $1,800, and a credit to Merchandise Inventory of $1,800
D) A debit to Income Summary of $1,800, and a credit to Cost of Goods Sold of $1,800
E) A debit to Merchandise Inventory of $1,800, and a credit to Cost of Goods Sold of $1,800