2. The reported cost of sales also includes $10,000 representing the annual amount of 2014 inventory, which was written off at year-end 2014, due to unrecorded shrinkage such as theft, damage, etc....

2. The reported cost of sales also includes $10,000 representing the annual amount of 2014 inventory, which was written off at year-end 2014, due to unrecorded shrinkage such as theft, damage, etc. Typically, shrinkage adds another 2% to cost of sales.

3. The inventory shrinkage represents the annual amount of inventory that is typically written off at year-end, due to unrecorded shrinkage such as theft, damage, etc.