Eagle Eye Sunglasses had the following FIFO perpetual inventory record at June 30, the end of the fiscal year.

A physical count of the inventory performed at year end revealed $587.00 of inventory on hand.
Requirements
1. Journalize the adjusting entry for inventory, if any is required.
2. What could have caused the value of the ending inventory based on the physical count to be lower than the amount based on the perpetual inventory record?

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Purchases Unit Cost of Goods Sold Unit Inventory on Hand Unit Total Total Total Date Quantity Cost Cost Quantity Cost Cost Quantity Cost Cost Jun 1 Jun 3 200 $9.00 $1,800.00 $9.00 $1,800.00 125 $9.25 $1,156.25 $9.00 180.00 $9.25 $1,156.25 $9.00 180.00 125 $9.25 $1,156.25 $9.40 940.00 30 $9.25 277.50 100 $9.40 940.00 125 $9.25 $1,156.25 200 Jun 7 180 $9.00 $1,620.00 20 125 20 Jun 13 100 $9.40 940.00 100 Jun 18 Jun 25 Jun 30 225 20 $9.00 180.00 95 $9.25 $ 878.75 30 $9.25 277.50 35 $9.40 $ 329.00 $3,285.25 $2,096.25 360 65 $9.40 611.00 611.00 65