Under a periodic inventory system, the adjustment for merchandise inventory is made in:Multiple Choiceone step.two steps.three steps.four steps

Break Down the Problem

1. Identify how adjustments are made under a periodic inventory system.
2. Understand the steps involved in the adjustment process for merchandise inventory.

Relevant Concepts

1. The periodic inventory system records purchases and sales of inventory during an accounting period, with adjustments made at the end.
2. Adjustments typically involve calculating the cost of goods sold (COGS) and determining the ending inventory.

Analysis and Detail

1. Inventory Purchases: At the end of the period, all inventory purchases are summed.

2. Ending Inventory Count: A physical count of inventory is conducted to find the ending inventory.

3. Cost of Goods Sold Calculation: COGS is calculated using the formula:

   $\text{COGS} = \text{Beginning Inventory} + \text{Purchases} - \text{Ending Inventory}$

Verify and Summarize

Based on the periodic inventory system, adjustments are made in three main steps: tallying purchases, conducting physical inventory counts, and calculating COGS.

Final Answer

The adjustment for merchandise inventory under a periodic inventory system is made in three steps.