the spare parts inventory account shows an unadjusted balance of 450. a physical count shows a blance on hand of 100

the spare parts inventory account shows an unadjusted balance of 450. a physical count shows a blance on hand of 100. What do i have to do! im stuck!

To determine the adjusted balance of the spare parts inventory account, we need to consider the discrepancy between the unadjusted balance and the physical count.

In this case, the unadjusted balance of the spare parts inventory account is $450, while the physical count reveals a balance on hand of only 100 units. We have a discrepancy between the recorded amount and the actual amount.

To adjust the inventory account, we need to make a journal entry that reflects the difference between the unadjusted balance and the physical count. Since the physical count shows that there are only 100 units on hand, we need to reduce the balance of the account by the value of the missing inventory.

Let's assume that the value of each spare part is $5. By multiplying the value per unit by the difference in quantity (450 - 100), we can calculate the adjustment needed: 350 (units) * $5 (value) = $1750.

To adjust the spare parts inventory account, you would make the following journal entry:

Debit: Cost of Goods Sold (or an Expense account) - $1750
Credit: Spare Parts Inventory - $1750

This journal entry accounts for the decrease in inventory and recognizes it as an expense, reducing the net income of the company.

After making this adjustment, the adjusted balance of the spare parts inventory account will be $100, reflecting the actual inventory on hand.