Inventory balance of $120,000
Cost of Goods Sold $240,000
Physical count on Dec. 31, 2000 - $92,000 of ending inventory
Adjust the inventory records assuming that the perpetual inventory method is used.

First 120,000 - 92,000 = 28,000
Dr.Cost of goods sold... 28,000
Cr.Merchandise inventory... 28,000