On September 30 a physical inventory was taken of merchandise on hand. The cost of merchandise on hand was determined to be $46700?

On the trial balance the inventory amount is $47499 + 142 =47641 Then you would subtract the merchandise on hand from the 47641. I got the 142 from the adjustments on the inventory I had a dr. 142.
Is this correct?

I would debit Income summary and cr. Inventory. I think this is right but not sure.

So the books say you have 47,641 in inventory

Yet you only have 46,700 in inventory.

Therefore, there is a loss (most likely used up doing business) of 941

That 941 would be COGS

Dr. COGS 941
Cr. Inventory 941

I'm kind of wondering if this is periodic inventory, because of the use of that income summary account.

sunfiregirl, can you confirm if you are making the adjusting entry for a periodic inventory system?

... first, you don't "depreciate" inventory. That's been driving me nuts.

Now that I've seen your other post...

Where did you get the 142 debit to the inventory?

And as for that income summary, that's only used for the adjustment for periodic inventory. That adjustment is not the same adjustment as doing the one for perpetual where you are just correcting to the actual physical count. I am sincerely hoping they are not teaching you both at the same time!! But if they are, you need to be careful to keep those separated.