Do you maintain an inventory of merchandise for sale to your customers? If so, you need to physically count the items that are in your inventory at the end of the accounting period. Your general ledger inventory account should show the total cost of your inventory items on hand at period end. Adjusting entries are required in your general journal so that your ending inventory is reflected on your books.
|To clear out beginning (1/1/2000) inventory|
|To book ending inventory at 12/31/2001|