Top Fuel Auto Parts, Inc., had the following FIFO perpetual inventory record for one of its inventory items at November 30, the end of the fiscal year.

A physical count of the inventory performed at year-end revealed $172.20 (28 items) of inventory on hand for this item.

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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Inventory on Hand Purchases Cost of Goods Sold Unit Unit Total Unit Total Total Date Quantity Cost Cost Quantity Cost Cost Quantity 150 150 Cost $6.00 $6.00 $6.05 $6.00 $6.05 Cost $900.00 Nov 1 Nov 3 $900.00 $847.00 $120.00 $847.00 $120.00 $847.00 $553.50 $332.75 $553.50 140 $6.05 $847.00 140 20 140 $6.00 s 780.00 Nov 7 130 $6.15 $ 553.50 Nov 13 90 20 140 90 $6.00 $6.05 $6.15 $6.05 $6.15 $6.00 $ 120.00 $6.05 $ 514.25 $6.05 $ 332.75 $6.15 $ 369.00 $2,116.00 Nov 18 20 85 55 90 Nov 25 55 60 30 $6.15 $184.50 $184.50 Nov 30 230 $1,400.50 350 30