Shown as follows are selected transactions of Konshock's, a retail store that uses a perpetual inven-
tory system.
a. Purchased merchandise on account.
b. Recognized the revenue from a sale of merchandise on account. (Ignore the related cost of
goods sold.)
c. Recognized the cost of goods sold relating to the sale in transaction b.
d. Collected in cash the account receivable from the customer in transaction b.
e.
Following the taking of a physical inventory at year-end, made an adjusting entry to record a
normal amount of inventory shrinkage.
Indicate the effects of each of these transactions on the elements of the company's financial state-
ments shown. Organize your answer in tabular form, using the column headings given. (Notice
that the cost of goods sold is shown separately from all other expenses.) Use the code letters I for
increase, D for decrease, and NE for no effect.