On December 31st, Paramount Sales conducts a wall-to-wall inventory.
The Merchandise Inventory account has a debit balance of $725,000.00. They determine that they have $139,500.00 in their inventory count. Cost of Goods sold indicate $576,000.00. There are two sheets at the service desk of interest. One sheet indicates the items removed from Merchandise Inventory for use within the store, these items should be part of the Store Supplies account. This sheet shows a value of $5,500.00. The other sheet shows known shrinkages identified during the period. This sheet shows $3,250.00. Neither of these sheets has been journalized.
Required:
(i) Identify the unknown, and previously unidentified shrinkage value.
(ii) Journalize the transfer to Store Supplies and the recognition of all shrinkages (known and unknown).